2. What amount of revenue will lee report on the year one income statement? 3. W

Question

2. What amount of revenue will lee report on the year one income statement?
3. What amount of cash flow from revenue will be reported on the statement of cash flow‘s?
4. What is the net income for the period?
5. What is the net cash flow from operating activities for the period?
6. What is the amount of net cash flow from investing activities?
7. What is the amount of net cash flow from financing activities?
8. What amounts of total assets, liabilities, and equity will be reported on the year end balance sheet? In Year 1, Lee Inc. billed its customers $62,000 for services performed. The company collected $51,000 of the amount billed. Lee incurred $39,000 of other operating expenses on account, and paid $31,000 of the accounts payable. It acquired $40,000 cash from the issue of common stock and invested $21,000 cash in the purchase of land. Required (Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempting to answer the questions.) Use the preceding information to answer the following questions: (Enter any decreases to account balances with a minus sign.) Retained Land Accounts lor 4 Next >

Explanation / Answer

Effect on events on general ledger Accounts Event Cash   + AR + Land    = Acct Pay.+ Common Retained Stock    + Earnings 1 Sales on account 62000 62000 2 Collected Accounts receivable 51000 -51000 3 Incurred expenses 39000 -39000 4 Paid Accounts payable -31000 -31000 5 Issue of stock 40000 40000 6 Purchase land -21000 21000 TOTALS 39000 11000 21000 8000 40000 23000 Req 2. Revenue to be reported in income Statement: Revenue :    $ 62000 Req 3. Cashflow from revenue on CFS:   Collection from Accounts receivable:   $ 51000 Req 4. Net income for the year: Revenue 62000 Less: Operating expense 39000 Net income for the year: 23000 Req 5. Cashflows from Operating activities: Collection from Accounts receivable 51000 Payment of Accounts payable -31000 Net cash provided from Operating activities 20000 Req 6. Cashflows from investing activities: Purchase of Land: -21000 Net cash used in Investing activiities -21000 Req 7. Cashflows from Financing activities: Issue of Common Stock 40000 Net cash provided in Financing activities 40000 Req 8. Total assets: Cash 39000 Accounts receivable 11000 Land 21000 Total Assets: 71000 Total Liabilities: Accounts payable 8000 Total Liabilities: 8000 Equity: Common Stock 40000 Retained earnings 23000 Total Stockholder's equity 63000

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