Use Excel for Problem 133 Interrelationships among financial

Use Excel for Problem 1-33 Interrelationships among financial statements

Crawford Enterprises started the 2014 accounting period with $75,000 of assets (all cash), $15,000 of liabilities, and $25,000 of common stock. During the year, Crawford earned cash revenues of $46,000, paid cash expenses of $26,000, and paid a cash dividend to stockholders of $5,000. Crawford also acquired $15,000 of additional cash from the sale of common stock and paid $10,000 cash to reduce the liability owed to a bank.

Required

a.Prepare an income statement, statement of changes in stockholders’ equity, period-end balance sheet, and statement of cash flows for the 2014 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)

b.Determine the percentage of total assets that were provided by creditors, investors, and earnings.

c.Determine the balance in the Revenue, Expense, and Dividends accounts as of January 1, 2015.

Solution

Crawford Enterprises Accounting period 2014 Statement of beginning position Assets 75000 Total assets 75000 Liabilities 15000 Common Stock 25000 Retained earnings 35000 Totalliabilities and equity 75000 Transactions during the year: Debit Credit Cash 20000 Revenues 46000 Expenses 26000 (Year\'s transactions) Dividends paid 5000 Cash 5000 (Dividend paid to stockholders) Cash 15000 Common Stock 15000 (Additional common stock issued for cash) Liabilities 10000 Cash 10000 (Liability to bank reduced by cash payment) a Income statement for 2014 Revenues 46000 Expenses 26000 Net income 20000 Dividends paid 5000 Profit and loss account c/o 15000 Statement of changes in stockholders\' equity Opening balance: Common Stock 25000 Retained earnings 35000 60000 Additional common stock issued 15000 Dividends paid 5000 Profit and loss account 15000 Closing balance 85000 Period end balance sheet Assets Beginning balances 75000 add Net Revenue 20000 Additional Common Stock 15000 110000 less Dividends 5000 Bank 10000 15000 Closing balances 95000 Liabilities & Equity Common Stock 40000 Retained earnings 50000 Profit and loss account Total equity 90000 Liabilities 5000 Total liabilities & equity 95000 Statement of cash flows 2014 Sources Opening working capital 75000 Net revenue 20000 Additional Common Stock 15000 110000 Uses Dividends 5000 Reduction of liability to bank 10000 15000 Closing working capital 95000 b Total assets 95000 Percentage provided by creditors 5.26% Percentage provided by investors 42.11% Percentage provided by erarnings 52.63% c There would be no balances in these accounts as they are revenue items and have been closed.