Answer and Explanation:
According to the scenario, The presentation of the each financial statement is presented below:
Income Statement
Particular Amount ($)
Sales 203,000
Less - merchandise cost 128,000
Gross Profit 75,000
Less-Operating expenses paid 53,500
Less-Paid warranty repairs 5,500
Less-Provision for warranty($203,000 ×3%) 6,090
Less-interest expenses($20,000 × 6% × 4 ÷ 12) 400
Net Income 9510
Balance Sheet
Assets Amount ($) Liabilities
& stockholder’s equity Amount ($)
Cash 92,300 Accounts payable
($176,500-$124,200) 52,300
Merchandise
inventory
($176,500-$128,000) 48,500 Sales tax payable
{($203,000 × 7%) - $10,710} 3,500
Warranty payable 6,090
Interest payable 400
Notes payable 20,000
Common stock equity 49,000
Retained earnings 9,510
Total 140,800 Total 140,800
Cash Flow Statement
Particular Amount($)
Cash flow from operating activities:-
Cash receipt from sale 217,210
Less - Paid accounts payable -124,200
Less - Sales tax paid -10,710
Less - Paid warranty repairs -5,500
Less - paid operating expenses -53,500
Total amount of Cash flow from operating activities 23,300
Cash flow from investing activities:-
Cash flow from financing activities:-
Issue of common stock 49,000
Add-Borrowing from local bank 20,000
Total amount of Cash flow from financing activities 69,000
Net increase in cash 92,300
Opening cash balance -
Ending cash balance 92,300
Working note:
Total Cash Amount
Particulars Amount ($)
Amount received from issue of common stock 49,000
Add-Sold equipment $203,000 + ($203,000 × 7%) 217,210
Less-Sales tax paid to the state agency ($153,000 × 7%) 10,710
Add-Borrowed from local bank 20,000
Less-Paid warranty repairs 5,500
Less-Paid operating expenses 53,500
Less-Paid accounts payable 124,200
Net cash 92,300
Retained Earnings
Particulars Amount ($)
Sold equipment 203,000
Less-Merchandise cost 128,000
Less-Paid warranty repairs 5,500
Less-Paid operating expenses 53,500
Less-interest expenses 400
Less-Provision for warranty 6,090
Net Retained earnings 9,510
These are items of the financial statement i.e listed above
