Question :
184. Koger Consultants began operations June 1, 2007 by making an : 1233766
184. Koger Consultants began operations on June 1, 2007 by making an investment of $30,000 in return for capital stock. The financial statements for Koger Consultants are shown below for the month ended June 30, 2007 (the first month of operations). Determine the missing amounts for letters (a) through (p).
Koger ConsultantsIncome StatementFor the Month Ended June 30, 2007
Fees earned $22,000
Operating expenses:
Wages expense$7,250
Rent expense(a)
Supplies expense1,600
Utilities expense900
Miscellaneous expense 1,550
Total operating expenses (b)
Net income $ (c)
Koger ConsultantsStatement of Retained EquityFor the Month Ended June 30, 2007
Retained earnings, June 1, 2007 0
Net income for June 30, 2007 (d)
$ (e)
Less dividends 4,000
Retained earnings, June 30, 2007 (f)
Koger ConsultantsBalance SheetJune 30, 2007
Assets Liabilities
Cash$ (g) Accounts payable$ (i)
Supplies1,100 Stockholders’ Equity
Land (h) Capital stock (j)
Retained earnings(k)
Total assets$45,900 Total liabilities and
Stockholders’ Equity$(l)
Koger ConsultantsStatement of Cash FlowsFor the Month Ended June 30, 2007
Cash flows from operating activities:
Cash received from customers$22,000
Deduct cash payments for expenses and payments to creditors 3,200
Net cash flow from operating activities $ 18,800
Cash flows from investing activities:
Cash payments for acquisition of land (20,000)
Cash flows from financing activities:
Cash received as owner’s investment$ (m)
Deduct cash dividends paid (n)
Net cash flow from financing activities (o)
Net cash flow and Dec. 31, 2007 cash balance $ (p)
Place your answers in the space provided below. Hint: Use the interrelationships among the financial statements to solve this problem.
(a)__________
(b)__________
(c)__________
(d)__________
(e)__________
(f)__________
(g)__________
(h)__________
(i)__________
(j)__________
(k)__________
(l)__________
(m)__________
(n)__________
(o)__________
(p)__________
185. Pyle Computer Repairs, Inc. was organized on January 1, 2007, as a corporation. List the errors that you find in the following financial statements and prepare the corrected statements for the three months ended March 31, 2007.
Pyle Computer Repairs, Inc.Income StatementFor the Three Months Ended March 31, 2007
Fees earned $40,000
Operating expenses:
Salary expense$7,735
Rent expense3,200
Wages expense1,950
Utilities expense1,225
Miscellaneous expense2,000
Answering service expense550
Supplies expense 2,000
Total operating expenses 29,000
Net income $11,000
Jay Pyle, CPAStatement of Retained EarningsMarch 31, 2007
Retained Earnings January, 1, 2007 $ 0
Net income for the 3 months 11,000
11,000
Less dividends 5,000
Increase in Retained Earnings 6,000
Retained Earnings, March 31, 2007. $6,000
Balance SheetFor the Three Months Ended March 31, 2007
Assets Stockholders’ Equity
Land$10,000 Capital stock$36,000
Cash15,860 Liabilities
Accounts payable2,670 Accounts receivable 12,225
Supplies 925 Total liabilities and
Total assets$48,125 Stockholders’ Equity 48,125
Errors in the Jay Pyle, CPA, financial statements include the following:
(1)Miscellaneous expense is incorrectly listed after utilities expense in the income statement. Miscellaneous expense should be listed as the last expense, regardless of the amount.
(2)The operating expenses are incorrectly added. Instead of $29,000, the total should be $18,660.
(3)Because operating expenses are incorrectly added, the net income is incorrect. It should be listed as $21,340.
(4)The statement of retained earnings should be for a period of time instead of a specific date. That is, the statement of retained earnings should be reported “For the Three Months Ended March 31, 2007.”
(5)The amount of the stockholders’ equity is incorrect. It should be $36,340.
(6)The name of the company is missing from the balance sheet heading.
(7)The balance sheet should be as of “March 31, 2007,” not “For the Three Months Ended March 31, 2007.”
(8)Cash, not Land, should be the first asset listed in the balance sheet.
(9)Accounts Payable is incorrectly listed as an asset in the balance sheet. Accounts Payable should be listed as a liability.
(10)Liabilities should be listed in the balance sheet ahead of stockholders’ equity.
(11)Accounts Receivable is incorrectly listed as a liability in the balance sheet. Accounts Receivable should be listed as an asset.
(12)The total assets and the total liabilities do not foot.
186.
Telephone Expense$750
Cash$3,150
Accounts Payable$640
Dividends$300
Fees Earned$10,700
Rent Expense$1,000
Supplies$230
Accounts Receivable$1,800
Computer Equipment$15,000
Capital Stock$13,080
Wages Expense$3,600
Utilities Expense$350
Notes Payable$2,000
Office Expense$240
Using the above accounts and their amounts, prepare in good format an Income Statement for ABC Tutoring Company, month ended July 31, 2007:
