Acc121 Survey of Accounting: P1-2 The financial statements at the end of La Jolla Realty

Acc121 Survey of Accounting
P1-2
The financial statements at the end of La Jolla Realty’s first month of operations are shown below.
LA JOLLA REALTY
Income Statement
For the Month Ended April 30, 2008
Fees earned 56,400
Operating expenses:
Wages expense (a)
Rent expense 5,760
Supplies expense 4,800
Utilities expense 3,240
Miscellaneous expense 1,980
Total operating expenses 28,680
Net income (b)

LA JOLLA REALTY
Retained Earnings Statement
For the Month Ended April 30, 2008
Net income for April (c)
Less dividends (d)
Retained earnings, April 30, 2008 (e)

LA JOLLA REALTY
Balance Sheet
April 30, 2008
Assets
Cash 35,400
Supplies 2,400
Land (f)
Total assets (g)

Liabilities
Accounts payable 2,880

Stockholders’ Equity
Capital stock (h)
Retained earnings (i) (j)
Total liabilities and stockholders’ equity (k)

LA JOLLA REALTY
Statement of Cash Flows
For the Month Ended April 30, 2008
Cash flows from operating activities:
Cash received from customers (l)
Deduct cash payments for expenses and payments to creditors 28,200
Net cash flows from operating activities (m)

Cash flows from investing activities:
Cash payments for acquisition of land 86,400

Cash flows from financing activities:
Cash received from issuing capital stock 108,000
Deduct dividends 14,400
Net cash flows from financing activities (n)
Net cash flow and April 30, 2008 cash balance (o)

Instructions
1. Would you classify a realty business like La Jolla Realty as a manufacturing, merchandising, or service business?
2. By analyzing the interrelationships between the financial statements, determine the proper amounts for (a) through (o).
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