Sanyu Sony started a new business and completed these transa

Sanyu Sony started a new business and completed these transactions during December.

Dec. 1 Sanyu Sony transferred $67,400 cash from a personal savings account to a checking account in the name of Sony Electric in exchange for its common stock.

2 The company rented office space and paid $1,400 cash for the December rent.

3 The company purchased $14,500 of electrical equipment by paying $6,300 cash and agreeing to pay the $8,200 balance in 30 days.

5 The company purchased office supplies by paying $800 cash.

6 The company completed electrical work and immediately collected $1,100 cash for these services.

8 The company purchased $2,560 of office equipment on credit.

15 The company completed electrical work on credit in the amount of $4,500.

18 The company purchased $410 of office supplies on credit.

20 The company paid $2,560 cash for the office equipment purchased on December 8.

24 The company billed a client $900 for electrical work completed; the balance is due in 30 days.

28 The company received $4,500 cash for the work completed on December 15.

29 The company paid the assistant’s salary of $1,400 cash for this month.

30 The company paid $530 cash for this month’s utility bill.

31 The company paid $970 cash in dividends to the owner (sole shareholder).

3-a. Prepare an income statement for the current month.  

3-b. Prepare a statement of retained earnings for the current month.

3-c. Prepare a statement of cash flows for the current month. (Cash outflows should be indicated with a minus sign.)

3-d. Prepare a balance sheet as of the end of the month.

Solution

Trial Balance Particulars Dr. Amt. Cr. Amt. Cash    59,040.00 Office Supplies      1,210.00 Accounts Receivable          900.00 Electrical Equipment    14,500.00 Office Equipment      2,560.00 Accounts Payable          410.00 Notes Payable      8,200.00 Common Stock    67,400.00 Dividends          970.00 Service Revenue      6,500.00 Rent Expenses      1,400.00 Salary Expenses      1,400.00 Utility Expenses          530.00 Total    82,510.00    82,510.00                   -   Answer 3-a. Income Statement For the Month Ended Dec 31 Revenue Service Revenue      6,500.00 Expenses Rent Expenses      1,400.00 Salary Expenses      1,400.00 Utility Expenses          530.00 Total Expenses      3,330.00 Net Income      3,170.00 Answer 3-b. Statement of Retained Earnings For the Month Ended Dec 31 Beginning Balance                   -   Net Income      3,170.00 Sub-total      3,170.00 Dividends          970.00 Ending Balance, Dec 31      2,200.00 Answer 3-c. Statement of Cash Flows (Indirect Method) For the Month ended Dec 31 Cash Flow from opearating activities: Net Income            3,170 Add/(Less) non cash effects on operating activities Increase in Accounts Receivables             (900) Increase in Supplies          (1,210) Increase in Accounts Payables                410          (1,700) Net Cash provided by operating activities            1,470 Cash flow from Investing Activities Purchase of Electrical Equipment          (6,300) Purchase of Office Equipment          (2,560) Net Cash used by Investing activities          (8,860) Cash Flow from Financing Activities Issue of Common Stock          67,400 Cash dividend paid             (970) Net Cash provided by Financing activities          66,430 Net Increase / (Decrease) in Cash          59,040 Cash balance at the beginning - Dec 1                   -   Cash balance at the end - Dec 31          59,040 Answer 3-d. Balance Sheet As on Dec 31 Assets Current Assets Cash 59040 Office Supplies 1210 Accounts Receivable 900    61,150.00 Property, Plant & Equipment Electrical Equipment 14500 Office Equipment 2560    17,060.00 Total Assets    78,210.00 Liabilities & Stockholders\' Equity Liabilities Current Libilities Accounts Payable          410.00 Notes Payable      8,200.00      8,610.00 Long-Term Liabilities                   -   Total Liabilities      8,610.00 Stockholders\' Equity Common Stock    67,400.00 Retained Earnings      2,200.00 Total Stockholders\' Equity    69,600.00 Total Liabilities & Stockholders\' Equity    78,210.00