Answer:
Smart Touch Learning
1. Income Statement
For the year ended December 31, 2016
Service Revenue $27,600
Salaries Expense 7,200
Depreciation Expense Furniture 100
Insurance Expense 350
Utilities Expense 380
Rent Expense 2,000
Supplies Expense 60 10,090
Net income $17,510
2. Statement of Retained Earnings
Net income $17,510
Dividends (4,600)
Retained earnings $12,910
3. Balance Sheet
As of December 31, 2016
Assets
Current Assets:
Cash 45,710
Accounts Receivable 1,300
Office Supplies 350
Prepaid Insurance 1,050 48,410
Noncurrent assets:
Furniture 9,100
Acc. Depreciation - Furniture (100) 9,000
Total assets 57,410
Liabilities and Equity
Current liabilities:
Salaries Payable 4,600
Unearned Revenue 4,400
Total liabilities 9,000
Equity:
Common Stock 35,500
Retained earnings 12,910
Total equity 48,410
Total liabilities and equity 57,410
4. Statement of Cash Flows
Operating activities:
Net income $17,510
Add Non-cash flows:
Depreciation expense 100
Working capital changes:
Accounts Receivable (1,300)
Office Supplies (350)
Prepaid Insurance (1,050)
Salaries Payable 4,600
Unearned Revenue 4,400
Net operating cash $23,910
Investing activities:
Furniture ($9,100)
Financing activities:
Common Stock 35,500
Dividends (4,600)
Net financing cash $30,900
Net cash flows $45,710
Explanation:
a) Data and Calculations:
SMART TOUCH LEARNING
Adjusted Trial Balance
December 31, 2016
Account Title Debit Credit
Cash 45,710
Accounts Receivable 1,300
Office Supplies 350
Prepaid Insurance 1,050
Furniture 9,100
Accumulated Depreciation - Furniture 100
Salaries Payable 4,600
Unearned Revenue 4,400
Common Stock 35,500
Dividends 4,600
Service Revenue 27,600
Salaries Expense 7,200
Depreciation Expense Furniture 100
Insurance Expense 350
Utilities Expense 380
Rent Expense 2,000
Supplies Expense 60
Total 72,200 72,200
