Question

Sanyu Sony started a new business and completed these transactions during December.

Answer 1

Answer:

             Sanyu Sony  

         Income Statement  

For the month ended December 31  

 

Revenue                            $7,100

Less: Operating expenses     2,940

Net Income                             $4,160

               Sanyu Sony  

  Statement of Retained earnings  

For the month ended December 31  

 

December 1          $        -

Add: Net Income    4,160

Less: Dividends      950

December 31                  $3,210

               Sanyu Sony

            Balance Sheet

          As of December 31

               

                     Asset  

Current Assets  

Cash                      $59,180

Acounts receivable     900

Office supplies            1,150

Total current assets      $61,230

Non-current assets  

Equipment                 15,530

 

Total assets               $76,760

  Liabilities and Owner's Equity

Current liability  

Accounts Payable     $350

 

Non-current liability  

Note Payable                    8,200

 

Total liabilities          $8,550

Owner's Equity  

 

Common Stock        $65,000

Retained earnings             3,210

Total equity                $68,210

 

Total liabilities and Equity  $76,760

                                Sanyu Sony  

                      Statement of Cash Flows  

             For the month ended December 31  

 

Net Income                                                           $4,160

Changes in working capital:  

Increase in:  

 Accounts receivable   (900)

 Office supplies          (1,150)

   Increase in:    

 Accounts payable   350                                              

Net cash provided by operating activities    $2,460

Cash flow used in investing activity  

Acquisition of equipment    (15,530)

Increase in Notes payable     8,200

Payment in dividends       (950)                                        

Cash flow used in investing activities                  (8,280)

Cash flow from financing activity  

Collection of subscriptions receivable           65,000

CASH AT END OF DECEMBER                   $59,180

Explanation:

Balance sheet is a statement of financial position that consists of 3 sections; Assets, liabilities and equity. It summarizes the financial balances of the company's accounts. All real accounts will be reflected in balance sheet.

Income statement shows the nominal accounts of the company. It shows how well the company performs during the period thru its revenue and expenses summary that is reflected in this statement.

Statement of Retained earnings shows the balances of the retained earnings for the period.

Statement of cash flows has 3 sections; operating, investing and financing activities.