The financial statements at the end of Wolverine Realty’s first month of operations are as follows:
Wolverine Realty Income Statement For the Month Ended April 30, 2019 Fees earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (a) Expenses:
Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $300,000 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000 Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (b) Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,000 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475,000 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $275,000 Wolverine Realty Statement of Owner’s Equity For the Month Ended April 30, 2019 Dakota Rowe, capital, April 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (c) Investment on April 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 375,000 Net income for April . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (125,000) Increase in owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(e) Dakota Rowe, capital, April 30, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (f ) Wolverine Realty Balance Sheet April 30, 2019 Assets
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $462,500
Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,500
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000 Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (g) Liabilities Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 100,000 Owner’s Equity
Dakota Rowe, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h) Total liabilities and owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (i) Wolverine Realty Statement of Cash Flows For the Month Ended April 30, 2019 Cash flows from operating activities: Cash receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ ( j) Cash payments for expenses and payments to creditors . . . . . . . . . . . (387,500) Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . $ (k) Cash flows from investing activities: Cash payments for acquisition of land . . . . . . . . . . . . . . . . . . . . . . . . . . .(l) Cash flows from financing activities: Cash receipt of owner’s investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (m) Cash withdrawals by owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (n) Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .(0) Net increase (decrease) in cash and April 30, 2019, cash balance . . . . . . $ (p)
Instructions
By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).
Answer:
a. Fees earned, $750,000 ($275,000 + $475,000)
b. Supplies expense, $30,000 ($475,000 – $300,000 – $100,000 – $20,000 – $25,000)
c. Dakota Rowe, capital, April 1, 2019, $0; Wolverine Realty was organized on April 1, 2019.
d. Net income for April, $275,000 from income statement
e. Increase in owner’s equity, $525,000 ($375,000 + $275,000 – $125,000)
f. Dakota Rowe, capital, April 30, 2019, $525,000
g. Total assets, $625,000 ($462,500 + $12,500 + $150,000)
h. Dakota Rowe, capital, $525,000 ($625,000 – $100,000); same as (g)
i. Total liabilities and owner’s equity, $625,000 ($100,000 + $525,000)
j. Cash received from customers, $750,000; this is the same as fees earned (a) since there are no accounts receivable.
k. Net cash flow from operating activities, $362,500 ($750,000 – $387,500)
l. Cash payments for acquisition of land, ($150,000)
m. Cash received as owner’s investment, $375,000
n. Cash withdrawal by owner, ($125,000)
o. Net cash flow from financing activities, $250,000 ($375,000 – $125,000)
p. Net increase in cash and April 30, 2019, cash balance, $462,500 ($362,500 – $150,000 + $250,000); also, the cash balance on the balance sheet