Raleigh Corporation began operations on February 10, 2018. During 2018, the comp

Question

Raleigh Corporation began operations on February 10, 2018. During 2018, the company entered into the following transactions Issued S110,000 of common stock and $25,000 of preferred stock. Performed services for $580,000. Issued $475,000 in long-term debt for cash. Incurred expenses: $125,000 for wages, $35,000 for supplies, $80,000 for depreciation, and $75,000 for miscellaneous expenses Purchased fixed assets for $250,000 cash. Declared, but did not pay, cash dividends of $10,000. Purchased fixed assets in exchange for a long-term note valued at $85,000. 1. 2. 3. 4. 5. 6. 7. REQUIRED: a. Classify each transaction as either operating, investing, or financing b. Prepare an income statement. c. Compute comprehensive income and compare it to the income reported on the income statement Discuss

Explanation / Answer

a. Classification of Each Transaction 1. Financing Activities 2. Operating Activities 3. Financing Activities 4. Operating Activities 5. Investing Activities 6. Non Cash Activities 7. Non Cash Activities b. income Statement Service Performed $580,000.00 Less: Wages $125,000.00 Supplies $35,000.00 Depreciation $80,000.00 Miscellaneous Expense $75,000.00 Net Income $265,000.00 c. Comprehensive Income=Net Income +Other Comprehesive Income i.e. Unrealised gain on sale of Investment =$265000+0=$265000 No difference in Net income and Comprehensive Income

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