Atlas Realty
Income Statement
For the Month Ended May 31, 2014
Fees earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000
Expenses:
Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (a)
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000
Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,600
Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400
Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,800
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288,000
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (b)
Atlas Realty
Statement of Owner’s Equity
For the Month Ended May 31, 2014
LuAnn Martin, capital, May 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (c)
Investment on May 1, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (d)
Net income for May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (e)
$ (f)
Less withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (g)
Increase in owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h)
LuAnn Martin, capital, May 31, 2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (i)
Atlas Realty
Balance Sheet
May 31, 2014
Assets Liabilities
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,200 Accounts payable . . . . . . . . . . . . . . . . . . . . $48,000
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800 Owner’s Equity
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (j) LuAnn Martin, capital . . . . . . . . . . . . . . . . (l)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $ (k) Total liabilities and owner’s equity . . . . $ (m)
Atlas Realty
Statement of Cash Flows
For the Month Ended May 31, 2014
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (n)
Deduct cash payments for expenses and payments to creditors . . . . . . (252,800)
Net cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (o)
Cash flows from investing activities:
Cash payments for acquisition of land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (120,000)
Cash flows from financing activities:
Cash received as owner’s investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 160,000
Deduct cash withdrawal by owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,000)
Net cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (p)
Net increase (decrease) in cash and May 31, 2014, cash balance . . . . . . . $ (q)
Instructions
By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (q).
Answer:
a. Wages expense, $203,200 ($288,000 – $48,000 – $17,600 – $14,400 – $4,800)
b. Net income, $112,000 ($400,000 – $288,000)
c. LuAnn Martin, capital, May 1, 2014, $0; Atlas Realty was organized on May 1, 2014.
d. Investment on May 1, 2014, $160,000; from statement of cash flows.
e. Net income for May, $112,000; from (b)
f. $272,000 ($160,000 + $112,000)
g. Withdrawals, $64,000; from statement of cash flows.
h. Increase in owner’s equity, $208,000 ($272,000 – $64,000)
i. LuAnn Martin, capital, May 31, 2014, $208,000
j. Land, $120,000; from statement of cash flows.
k. Total assets, $256,000 ($123,200 + $12,800 + $120,000)
l. LuAnn Martin, capital, $208,000
m. Total liabilities and owner’s equity, $256,000 ($48,000 + $208,000)
n. Cash received from customers, $400,000; this is the same as fees earned since there are no accounts receivable.
o. Net cash flows from operating activities, $147,200 ($400,000 – $252,800)
p. Net cash flows from financing activities, $96,000 ($160,000 – $64,000)
q. Net cash flows and May 31, 2014, cash balance, $123,200 ($147,200 – $120,000 + $96,000); also, the cash balance on the balance sheet.