The following accounts and balances were drawn from the records of Barker Compan
ID: 2597106 • Letter: T
Question
The following accounts and balances were drawn from the records of Barker Company at December 31, 2016:
Supplies $ 650
Beginning retained earnings $ 18,000
Cash flow from investing act. (7,500)
Cash flow from financing act. 5,100
Prepaid insurance 2,200
Rent expense 2,300
Service revenue 78,000
Dividends 5,000
Other operating expenses 43,000
Cash 11,200
Supplies expense 200
Accounts receivable 18,000
Insurance expense 1,100
Prepaid rent 4,900
Beginning common stock 1,000
Unearned revenue 7,500
Cash flow from operating act. 7,400
Land 39,000
Common stock issued 5,200
Accounts payable 17,850
Required
a. Use the accounts and balances from Barker Company to construct an income statement.
b. Use the accounts and balances from Barker Company to construct statement of changes in stockholders' equity.
c. Use the accounts and balances from Barker Comapny to construct balance sheet.
d. Use the accounts and balances from Barker Comapny to construct statement of cash flows (show only totals for each activity on the statement of cash flows . (Amounts to be deducted and cash outflows should be indicated with a minus sign.)
Explanation / Answer
a. Income statement:
Service revenue
78,000
Less: Expenses
Other operating expenses
43,000
Supplies expense
200
Rent expense
2,300
Insurance expense
1,100
Total expense
(46,600)
Net income
31,400
b. Statement of changes in stockholders' equity:
Beginning common stock
1,000
Add: Common stock issued
5,200
Ending common stock
6,200
Beginning retained earnings
18,000
Add: Net income
31,400
Less: Dividends
(5,000)
Ending retained earnings
44,400
Total shareholders' equity
50,600
c. Balance sheet:
Assets:
Cash
11,200
Accounts receivable
18,000
Supplies
650
prepaid insurance
2,200
Prepaid rent
4,900
land
39,000
Total assets
75,950
Liabilities:
Accounts payable
17,850
Unearned revenue
7,500
Total liabilities
25,350
Stockholder's equity:
Common stock
6,200
retained earnings
44,400
Toatl stockholder's equity
50,600
Total liabilities and stockholder's equity
75,950
d. Statement of cash flows:
Cash flow from operating activity
7,400
Cash flow from investing activity
(7,500)
Cash flow from financing activity
5,100
Net change in cash
5,000
Add: opening cash balance (11,200-5,000)
6,200
Ending cash balance
11,200
Service revenue
78,000
Less: Expenses
Other operating expenses
43,000
Supplies expense
200
Rent expense
2,300
Insurance expense
1,100
Total expense
(46,600)
Net income
31,400