Question

Waddell Company had the following balances in its accounting records as of December 31, 2018:

Assets				Liabilities and Equity
Cash	$	53,000		Accounts Payable	$	30,000
Accounts Receivable		42,000		Common Stock		77,000
Land		27,000		Retained Earnings		15,000
Totals	$	122,000			$	122,000

The following accounting events apply to Waddell Company’s 2019 fiscal year:

Jan.	1		Acquired $48,000 cash from the issue of common stock.
Feb.	1		Paid $5,700 cash in advance for a one-year lease for office space.
Mar.	1		Paid a $1,900 cash dividend to the stockholders.
April	1		Purchased additional land that cost $27,000 cash.
May	1		Made a cash payment on accounts payable of $14,000.
July	1		Received $7,000 cash in advance as a retainer for services to be performed monthly over the coming year.
Sept.	1		Sold land for $21,000 cash that had originally cost $21,000.
Oct.	1		Purchased $1,060 of supplies on account.
Dec.	31		Earned $66,000 of service revenue on account during the year.
	31		Received cash collections from accounts receivable amounting to $62,000.
	31		Incurred other operating expenses on account during the year that amounted to $11,000.
	31		Recognized accrued salaries expense of $5,300.
	31		Had $140 of supplies on hand at the end of the period.
	31		The land purchased on April 1 had a market value of $32,000.
	31		Recognized $118 of accrued interest revenue.

Required

Based on the preceding information, answer the following questions for Waddell Company. All questions pertain to the 2018 financial statements. (Hint: Enter items in general ledger accounts under the accounting equation before answering the questions.)

What two additional adjusting entries need to be made at the end of the year?

What amount would Waddell report for land on the balance sheet?

What amount of net cash flow from operating activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

What amount of rent expense would be reported on the income statement? (Do not round intermediate calculations.)

What amount of total liabilities would be reported on the balance sheet?

What amount of supplies expense would be reported on the income statement?

What amount of unearned revenue would be reported on the balance sheet? (Do not round intermediate calculations.)

What amount of net cash flow from investing activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

What amount of total expenses would be reported on the income statement? (Do not round intermediate calculations.)

What total amount of service revenue would be reported on the income statement? (Do not round intermediate calculations.)

What amount of cash flows from financing activities would be reported on the statement of cash flows? (Enter cash outflows as negative amounts.)

What amount of net income would be reported on the income statement? (Do not round intermediate calculations.)

What amount of retained earnings would be reported on the balance sheet? (Do not round intermediate calculations.)

  

Answer 1

a. Additional entries to be made at the end of the year is:

Rent Expense (5,100*11/12) 4,675

Prepaid Rent 4,675

Unearned Revenue 0

Service Revenue (0) 0

(b)

Land recorded in books at year end will be 31,000+31,000-21,000 = 41,000

(c )

Net cash flow reported from operating activities is:

Cash paid for lease (5,100)

Cash payment to accounts payable (20,000)

Cash received in advance 7,600

cash received 61,000

Operating exp incurrred (10,000)

Net cash from operating activities $33,500

(d)

Rent Expense reported on Income statement will be 5,100*11/12 = $4,675