Missing Amounts From Financial Statements
The financial statements at the end of Paradise Realty's first month of operations are shown below.
| PARADISE REALTY Income Statement For the Month Ended November 30, 20Y3 |
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| Fees earned | $149,300 | |||
| Operating expenses: | ||||
| Wages expense | $ (a) | |||
| Rent expense | 14,400 | |||
| Supplies expense | 12000 | |||
| Utilities expense | 8,100 | |||
| Miscellaneous expense | 4,950 | |||
| Total operating expenses | (69,300) | |||
| Net income | $ (b) | |||
| PARADISE REALTY Statement of Stockholders' Equity For the Month Ended November 30, 20Y3 |
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| Common Stock | Retained Earnings | Total | |||||||
| Balances, Nov. 1, 20Y3 | $0 | $0 | $0 | ||||||
| Issuance of common stock | 270,000 | 270,000 | |||||||
| Net income | (c) | (c) | |||||||
| Dividends | (d) | (d) | |||||||
| Balances, Nov. 30, 20Y3 | $270,000 | $(e) | $314,000 | ||||||
| PARADISE REALTY Balance Sheet November 30, 20Y3 |
||
| Assets | ||
| Cash | $ 99,200 | |
| Supplies | 6,000 | |
| Land | (f) | |
| Total assets | $ (g) | |
| Liabilities | ||
| Note payable | $ 7,200 | |
| Stockholders' Equity | ||
| Common stock | $ (h) | |
| Retained earnings | (i) | |
| Total stockholders' equity | (j) | |
| Total liabilities and stockholders' equity | (k) | |
| PARADISE REALTY Statement of Cash Flows For the Month Ended November 30, 20Y3 |
||
| Cash flows from operating activities: | ||
| Cash received from customers | $ (l) | |
| Deduct cash payments for expenses and payments to creditors | (68,100) | |
| Net cash flows from operating activities | $ (m) | |
| Cash flows used for investing activities: | ||
| Cash payments for acquisition of land | (216,000) | |
| Cash flows from financing activities: | ||
| Cash received from issuing common stock | $ 270,000 | |
| Deduct dividends | (36,000) | |
| Net cash flows from financing activities | (n) | |
| Net increase in cash during month | (o) | |
| Cash as of November 1 | 0 | |
| Cash as of November 30 | (o) | |
Instructions:
1. Would you classify a realty business such as
Paradise Realty as a manufacturing, merchandising, or service
business?
2. By analyzing the interrelationships among the financial statements, determine the proper amounts for (a) through (o). Enter all amounts as positive numbers.
| a. Wages expense | $ |
| b. Net income | $ |
| c. Net income for November | $ |
| d. Dividends | $ |
| e. Retained earnings, November 30, 20Y3 | $ |
| f. Land | $ |
| g. Total assets | $ |
| h. Common stock | $ |
| i. Retained earnings | $ |
| j. Total stockholders' equity | $ |
| k. Total liabilities and stockholders' equity | $ |
| l. Cash received from customers | $ |
| m. Net cash flows from operating activities | $ |
| n. Net cash flows from financing activities | $ |
| o. Net cash flow and November 30, 20Y3 cash balance | $ |
1 more Check My Work uses remaining.
Answer to Part 1.
Paradise Reality is a Service Business, as the Revenue generated during the year is Fee, which is due to Services rendered.
Answer to Part 2.
Answer a.
Total Operating Expenses = Wages Expense + Rent Expense +
Supplies Expense + Utilities Expense + Miscellaneous Expense
$69,300 = (a) + $14,400 + $12,000 + $8,100 + $4,950
(a) = $29,850
Answer b.
Net Income = Fees Earned - Total Operating Expenses
(b) = $149,300 - $69,300
(b) = $80,000
Answer c.
Net Income = $80,000
(c) = $80,000
Answer d.
Total Balances, Nov. 30, 20Y3 = Total Balances, Nov. 1, 20Y3 +
Issuance of Common Stock + Net Income - Dividend
$314,000 = $0 + $270,000 + $80,000 - (d)
(d) = $36,000
Answer e.
Retained Earnings Balances, Nov. 30, 20Y3 = Retained Earnings
Balances, Nov. 1, 20Y3 + Net Income – Dividend
(e) = $0 + $80,000 - $36,000
(e) = $44,000
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