Answer:
a) Revenue = $46,750
b) Stockholder's equity $35,050
c) Net Total Assets = Stockholder's equity = $35,050
d) Net cash generated for the year is $13,050; and Ending cash balance is $50,050
Explanation:
a. Prepare an income statement for the 2018 accounting period
To prepare this, cash revenue is first determined as follows:
Revenue = Retained earning for the year + Expenses + dividend = $46,750
The income statement can now be prepared as follows:
Pratt Corp.
Income statement
For the 2018 accounting period
<u>Particulars $ </u>
Revenue 46,750
Expenses <u> (29,500) </u>
Net income 17,250
Dividend paid <u> (2,700) </u>
Retained Earnings for the year <u> 14,550 </u>
b. Prepare a statement of changes in stockholder's equity for the 2018 accounting period
Pratt Corp.
Statement of changes in stockholder's equity
For the 2018 accounting period
<u>Particulars $ </u>
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year <u> 14,550 </u>
Stockholder's equity <u> 35,050 </u>
c. Prepare a period-end balance sheet for the 2018 accounting period
Pratt Corp.
Balance Sheet
For the 2018 accounting period
<u>Particulars $ </u>
<u>Total Assets</u>
Ending cash balance 50,050
<u>Total Liability</u>
Liability <u> (15,500) </u>
Net Total Assets <u> 35,050 </u><u> </u>
Financed By:
Issue of common stock 8,500
Beginning retained earnings 12,000
Retained Earnings for the year <u> 14,550 </u>
Stockholder's equity <u> 35,050 </u>
Note: Since both the Net Total Assets and Stockholder's equity are both equal to $35,050 as normally require, it shows the balance sheet is accrurately prepared.
d. Prepare a statement of cash flows for the 2018 accounting period
Pratt Corp.
Statement of Cash Flows
For the 2018 accounting period
<u>Particulars $ $ </u>
Net income <u> 17,250 </u>
Cash flow from operating activities 17,250
Changes in Financing Activities:
Decrease in liability (10,000)
Issue of common stock 8,500
Dividend paid <u> (2,700) </u>
Cash flow from financing activities <u> (4,200) </u>
Net cash generated for the year 13,050
Beginning cash balance <u> 37,000 </u>
Ending cash balance <u> 50,050 </u>
