Assets

=

Liab.

+

Equity

20X1

Cash

+

Acct.

Rec.

=

Liab.

+

Cont. Capital

+

Ret. Ear.

Beginning Balances

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

1. Effect of Rev. Recog.

5,000

5,000

20X2

1. Effect of Cash Collect.

5,000

(5,000)

─────

────

────

─────

─────

Ending Balances

$5,000

+

$     -0-

=

$     -0-

+

$    -0-

+

$5,000

═════

════

════

═════

═════

The Packard Consultants

Income Statements

For the Periods Ended

20X1

20X2

Revenue

$5,000

$-0-

Expense

-0-

-0-

Net Income

$5,000

$-0-

Statements of Retained Earnings

Beginning Retained Earnings

$     -0-

$5,000

Net Income

$5,000

-0-

Distributions

-0-

-0-

Ending Retained Earnings

$5,000

$5,000

Balance Sheets

Assets

    Cash

$     -0-

$5,000

    Accounts Receivable

5,000

-0-

Total Assets

$5,000

$5,000

Equity

    Retained Earnings

$5,000

$5,000

Statements of Cash Flows

Cash Flows from Operating Activities

-0-

$5,000

Cash Flows from Investing Activities

-0-

-0-

Cash Flows from Financing Activities

-0-

-0-

Net Change in Cash

-0-

$5,000

Beginning Cash Balance

-0-

-0-

Ending Cash Balance

-0-

$5,000

Assets

=

Liab.

+

Equity

20X1

Cash

+

Inv.

Sec.

=

Bank

Loan

+

Int.

Pay.

+

Cont. Capital

+

Ret.

Ear.

Beginning Balances

$       -0-

$       -0-

$       -0-

$     -0-

$     -0-

$     -0-

1. Effect of Borrowing

10,000

10,000

2. Purch. of Securities

(10,000)

10,000

3. Earned Revenue

600

600

4. Accrued Int. Exp.

400

(400)

─────

────

────

────

─────

─────

End. / Beg. Balances

$    600

+

$10,000

=

$10,000

+

$   400

+

$    -0-

+

$ 200

20X2

1. Earned Revenue

1,350

1,350

2. Sale of Securities

10,000

(10,000)

3. Accrued Int. Exp.

800

(800)

4. Pay Interest

(1,200)

(1,200)

5. Repay Loan

(10,000)

(10,000)

─────

────

────

────

─────

─────

Ending Balances

$    750

+

$     -0-

=

$     -0-

+

$     -0-

+

$    -0-

+

$   750

═════

════

════

════

═════

═════

The Canton Company

Income Statements

For the Periods Ended

20X1

20X2

Revenue

$600

$1,350

Interest Expense

(400)

(800)

Net Income

$200

$550

Statements of Retained Earnings

Beginning Retained Earnings

-0-

$200

Net Income

$200

550

Distributions

-0-

-0-

Ending Retained Earnings

$200

$750

Balance Sheets

Assets

    Cash

$    600

$750

    Securities

10,000

-0-

Total Assets

$10,600

$750

Liabilities

    Interest Payable

$     400

-0-

    Note Payable

$10,000

-0-

Equity

    Retained Earnings

200

$750

    Total Liabilities and Equity

$10,600

$750

Statements of Cash Flows

Cash Flows from Operating Activities

    Inflow for Securities Income

$    600

$ 1,350

    Outflow for Interest Expense

-0-

(1,200)

Net Inflow from Operating Act.

$    600

$    150

Cash Flow from Investing Activities

    Inflow from Sale of Securities

-0-

$10,000

    Outflow for Purchase of Securities

(10,000)

-0-

Net Inflow (Outflow) from Investing Act.

(10,000)

$10,000

Cash Flows from Financing Activities

    Inflow from Issue of Note

10,000

-0-

    Outflow for Repayment of Note

-0-

$(10,000)

Net Inflow (Outflow) from Financing Act.

10,000

$(10,000)

Net Change in Cash

600

$      150

Beginning Cash Balance

-0-

600

Ending Cash Balance

$    600

$     750

Date

Principal

x

Rate

x

Time

=

Accrued Interest

April 1, 20X1

$1,000

x

.12

x

(9 ÷ 12)

=

$90

June 1, 20X1

$1,000

x

.12

x

(7 ÷ 12)

=

$70

October 1, 20X1

$1,000

x

.12

x

(3 ÷ 12)

=

$30

ASSETS

=

LIABILITIES

+

EQUITY

20X7

Accts.

Int.

Sal.

Int.

Note

Cont.

Ret.

Accounting Events

Cash

Rec.

Rec.

CD

Land

=

Pay.

Pay.

Pay.

+

Cap.

Ear.

Beginning Balances

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

$     -0-

(1)        Capital Acquisition

2,000

2,000

(2)        Invested in C.D.

(1,000)

1,000

(3)        Recognized Consulting Rev.

1,500

1,500

(4)        Collected Cash from Rec.

1,200

(1,200)

(5)        Recognized Salary Expense

900

(900)

(6)        Paid Liability for Salaries

(700)

(700)

(7)        Distributed Cash to Owners

(100)

(100)

(8)        Recognized Int. Rev. on C.D.

20

20

────

────

────

────

────

────

────

────

────

────

Ending Balances

$1,400

$  300

$   20

$1,000

$     -0-

$   200

$     -0-

$     -0-

$2,000

$   520

════

════

════

════

════

════

════

════

════

════

ASSETS

=

LIABILITIES

+

EQUITY

20X8

Accts.

Int.

Sal.

Int.

Note

Cont.

Ret.

Accounting Events

Cash

Rec.

Rec.

CD

Land

=

Pay.

Pay.

Pay.

+

Cap.

Ear.

Beginning Balances

$1,400

$   300

$    20

$1,000

$     -0-

$   200

$     -0-

$     -0-

$2,000

$   520

(1)        Capital Acquisition

3,000

3,000

(2)        Recognized Consulting Rev.

2,700

2,700

(3)        Collected Cash from Rec.

2,800

(2,800)

(4)        Recognized Salary Expense

1,500

(1,500)

(5)        Paid Liability for Salaries

(1,350)

(1,350)

(6)        Distributed Cash to Owners

(300)

(300)

(7)        Borrowed Funds from Bank

2,000

2,000

(8a)      Recognized Int. Rev. on C.D.

40

40

(8b)      Collected Cash for Interest

60

(60)

(8c)      Redeemed  Principal of C.D.

1,000

(1,000)

(9)        Purchased Land

(6,000)

6,000

(10)      Recognized Int. Exp. on Note

75

(75)

────

────

────

────

────

────

────

────

────

────

Ending Balances

$2,610

$   200

$     -0-

$     -0-

$6,000

$   350

$    75

$2,000

$5,000

$1,385

════

════

════

════

════

════

════

════

════

════

Income Statements

20X7

20X8

Consulting Revenue

$1,500

$2,700

Interest Revenue

20

40

Total Revenue

$1,520

$2,740

Salary Expense

(900)

(1,500)

Interest Expense

-0-

(75)

Net Income

$   620

$1,165

Statements of Changes in Equity

Beginning Contributed Capital

$     -0-

$2,000

Plus: Capital Acquisition

2,000

3,000

Ending Contributed Capital

$2,000

$5,000

Beginning Retained Earnings

$     -0-

$   520

Plus:  Net Income

620

1,165

Less:  Distributions

(100)

(300)

Ending Retained Earnings

$  520

$1,385

Total Equity

$2,520

$6,385

Balance Sheets

    Cash

$1,400

$2,610

    Accounts Receivable

300

200

    Interest Receivable

20

-0-

    Certificate of Deposit

1,000

-0-

    Land

-0-

6,000

Total Assets

$2,720

$8,810

    Salaries Payable

$   200

$   350

    Interest Payable

-0-

75

    Note Payable

-0-

2,000

Total Liabilities

$   200

$2,425

    Contributed Capital

$2,000

$5,000

    Retained Earnings

520

1,385

Total Equity

$2,520

$6,385

Total Liabilities and Equity

$2,720

$8,810

Statements of Cash Flows

Cash Flows from Operating Activities

    Cash Receipts from Consulting Revenue

$ 1,200

$2,800

    Cash Receipts from Interest Revenue

-0-

60

    Cash Payments for Salaries

(700)

(1,350)

        Net Cash Inflow from Operating Activities

$    500

$1,510

Cash Flows from Investing Activities

    Cash Receipt from C.D. Maturity

$       -0-

$1,000

    Cash Payment to Purchase C.D.

(1,000)

-0-

    Cash Payment to Purchase Land

-0-

(6,000)

        Net Cash Outflow from Investing Activities

$(1,000)

$(5,000)

Cash Flows from Financing Activities

    Cash Receipt from Bank Loan

$       -0-

$2,000

    Cash Receipt from Capital Acquisitions

2,000

3,000

    Cash Payment for Distribution

(100)

(300)

        Net Cash Inflow from Financing Activities

$1,900

$4,700

Net Change in Cash

$1,400

$1,210

Beginning Cash Balance

-0-

1,400

Ending Cash Balance

$1,400

$2,610