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11-8
Investments
72,000
48,000
120,000
Net Income*
9,600
14,400
24,000
Withdrawals
(3,500)
(1,500)
(5,000)
Ending Capital Balances
$78,100
$60,900
$139,000
*Moore: $24,000 x 40% = $9,600
Pounds: $24,000 x 60% = $14,400
PROBLEM 8-18 b. (cont.)
Auto Spa Company
Financial Statements
Balance Sheet
As of December 31, 2014
Assets
Cash
$139,000
Total Assets
$139,000
Liabilities
$ -0-
Equity
Sue Moore, Capital
78,100
Jim Pounds, Capital
60,900
Total Liabilities and Equity
$139,000
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash Flows From Operating Activities:
Inflow from Revenues
$ 80,000
Outflow for Expenses
(56,000)
Net Cash Flow from Operating Activities
$ 24,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Inflow from Partners
$120,000
Outflow for Partners’ Withdrawals
(5,000)
Net Cash Flow from Financing Activities
115,000
11-9
Net Change in Cash
139,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$139,000
PROBLEM 8-18 (cont.)
c. Corporation
Auto Spa, Inc.
Financial Statements
For the Year Ended December 31, 2014
Income Statement
Revenues
$80,000
Expenses
(56,000)
Net Income
$24,000
Statement of Changes in Stockholders’ Equity
Beginning Common Stock
$ -0-
Plus: Issuance of Common Stock
120,000
Ending Common Stock
$120,000
Beginning Retained Earnings
-0-
Plus: Net Income
24,000
Less: Dividends
(5,000)
Ending Retained Earnings
19,000
Total Stockholders’ Equity
$139,000
PROBLEM 8-18 c. (cont.)
Auto Spa, Inc.
Financial Statements
Balance Sheet
As of December 31, 2014
Assets
Cash
$139,000
Total Assets
$139,000
11-10
Liabilities
$ -0-
Stockholders’ Equity
Common Stock, $10 par value,
10,000 shares issued and outstanding
$100,000
Paid-In Capital in Excess of Par
20,000
Total Paid-In Capital
120,000
Retained Earnings
19,000
Total Liabilities and Stockholders’ Equity
$139,000
Statement of Cash Flows
For the Year Ended December 31, 2014
Cash Flows From Operating Activities:
Inflow from Revenues
$80,000
Outflow for Expenses
(56,000)
Net Cash Flow from Operating Activities
$ 24,000
Cash Flows From Investing Activities
-0-
Cash Flows From Financing Activities:
Inflow from Issue of Stock
120,000
Outflow for Dividends
(5,000)
Net Cash Flow from Financing Activities
115,000
Net Change in Cash
139,000
Plus: Beginning Cash Balance
-0-
Ending Cash Balance
$139,000
PROBLEM 8-19
Stockholders’ Equity
Common Stock, $10 par value, 100,000 shares authorized,
50,000 shares issued, and 49,200 shares outstanding
$500,000
Paid-In Capital in Excess of Par−Common Stock
150,000
Paid-In Capital in Excess of Cost−Treasury Stock
3,600
Total Paid-In Capital
$653,600
Retained Earnings1
151,000
Less: Treasury Stock (800 shares)
(12,000)
Total Stockholders’ Equity
$792,600
1 Beginning Retained Earnings $120,000
2014 Revenues 72,000
8-12
PROBLEM 8-20
a.
Malard Corporation
Accounting Equation
Event
Assets
=
Liabilities
Stockholders’ Equity
Cash
=
Div. Pay.
+
Pfd. Stk.
+
Com. Stk.
+
PIC in
Exc. PS
+
PIC in
Exc. CS
−
Treasury
Stock
+
Ret. Earn.
Acct. Title
R/E
2014
1/2
250,000
NA
NA
200,000
NA
50,000
NA
NA
1/15
180,000
NA
160,000
NA
20,000
NA
NA
NA
2/14
240,000
NA
NA
160,000
NA
80,000
NA
NA
12/31
280,000
NA
NA
NA
NA
NA
NA
280,000
Svc. Rev.
12/31
(165,000)
NA
NA
NA
NA
NA
NA
(165,000)
Op. Exp.
12/31*
NA
6,400
NA
NA
NA
NA
NA
(6,400)
Div.
Bal.
785,000
=
6,400
+
160,000
+
360,000
+
20,000
+
130,000
−
-0-
+
108,600
2015
1/31
(6,400)
(6,400)
NA
NA
NA
NA
NA
NA
3/1
368,000
NA
320,000
NA
48,000
NA
NA
NA
6/1
(14,000)
NA
NA
NA
NA
NA
14,000
NA
12/31
185,000
NA
NA
NA
NA
NA
NA
185,000
Svc. Rev.
12/31
(110,000)
NA
NA
NA
NA
NA
NA
(110,000)
Op. Exp.
12/31**
NA
63,200
NA
NA
NA
NA
NA
(63,200)
Div.
Bal.
1,207,600
=
63,200
+
480,000
+
360,000
+
68,000
+
130,000
−
14,000
+
120,400
*Preferred Stock: $80 x 4% x 2,000 shares = $6,400
**Preferred Stock: $80 x 4% x 6,000 shares = $ 19,200
Common Stock: Shares outstanding, 44,000 x $1.00 = 44,000
Total Dividend $63,200
8-13
PROBLEM 8-20 (cont.)
b.
2014
Malard Coproration
December 31, 2014
Stockholders’ Equity
Preferred Stock, $80 par value, 4% cumulative, 50,000 shares
authorized, 2,000 shares issued and outstanding
$160,000
Common Stock, $8 par value, 100,000
shares authorized, 45,000 shares issued and outstanding
360,000
Paid-In Capital in Excess of Par−Preferred Stock
20,000
Paid-In Capital in Excess of Par−Common Stock
130,000
Total Paid-In Capital
670,000
Retained Earnings
108,600
Total Stockholders’ Equity
$778,600
PROBLEM 8-20 c. (cont.)
c.
Schedule provided for use of instructor.
Schedule of Number of
Shares of Common Stock
Shares Issued
Shares
Outstanding
2014
Jan. 2
25,000
25,000
Feb. 14
20,000
20,000
Totals
45,000
45,000
2015
June 1
(1,000)
Totals
45,000
44,000
but only 44,000 outstanding.
8-14
PROBLEM 8-20 (cont.)
c.
Malard Corporation
Balance Sheet
As of December 31, 2015
Assets
Cash
$1,207,600
Total Assets
$1,207,600
Liabilities
Dividends Payable
$ 63,200
Total Liabilities
$ 63,200
Stockholders’ Equity
Preferred Stock, $80 par value, 4%
cumulative, 50,000 shares authorized,
6,000 shares issued and outstanding
$480,000
Common Stock, $8 par value, 100,000 shares
authorized, 45,000 shares issued, 44,000
shares outstanding
360,000
Paid-In Capital in Excess of Par−Preferred Stock
68,000
Paid-In Capital in Excess of Par−Common Stock
130,000
Total Paid-In Capital
1,038,000
Retained Earnings
120,400
Less: Treasury Stock
(14,000)
Total Stockholders’ Equity
1,144,400
Total Liabilities and Stockholders’ Equity
$1,207,600
8-15
PROBLEM 8-21
a.
Prairie Corp. Accounting Equation 2014
Event
Assets
=
Liab.
Stockholders’ Equity
Cash
=
Div.
Pay.
+
Pfd. Stk.
+
Com. Stk.
+
PIC in
Exc. PS
+
PIC in
Exc. TS
−
Treas.
Stock
+
Ret.
Earn.
+
App. Ret.
Earn.
Acct. Title
R/E
1.
150,000
NA
NA
150,000
NA
2.
260,000
NA
250,000
NA
10,000
NA
NA
NA
NA
3.
(9,600)
NA
NA
NA
NA
NA
9,600
NA
NA
4.*
NA
12,500
NA
NA
NA
NA
NA
(12,500)
NA
Div.
5.
4,800
NA
NA
NA
NA
1,200
(3,600)
NA
NA
6.
(12,500)
(12,500)
NA
NA
NA
NA
NA
NA
NA
7a.
80,000
NA
NA
NA
NA
NA
NA
80,000
NA
Rev.
7b.
(48,000)
NA
NA
NA
NA
NA
NA
(48,000)
NA
Op. Exp.
8.
NA
NA
NA
NA
NA
NA
NA
(6,000)
6,000
Totals
424,700
=
-0-
+
250,000
+
150,000
+
10,000
+
1,200
6,000
+
13,500
+
6,000
*$50 x 5% = $2.50; $2.50 x 5,000 = $12,500
11-16
PROBLEM 8-21 (cont.)
b.
Prairie Corp.
December 31, 2014
Stockholders’ Equity
Preferred Stock, $50 stated value, 5,000 shares issued and
outstanding
$ 250,000
Common Stock, $10 par value, 15,000 shares
issued, and 14,500 shares outstanding
150,000
Paid-In Capital in Excess of Stated Value Pref. Stk.
10,000
Paid-In Capital in Excess of Cost, Treasury Stk.
1,200
Total Paid-In Capital
$411,200
Retained Earnings
Appropriated
$ 6,000
Unappropriated1
13,500
Total Retained Earnings
19,500
Less: Treasury Stock (500 shares)
(6,000)
Total Stockholders’ Equity
$424,700
1 Service Revenue $80,000
Total $13,500
