第一章final.docVIP

第一章 【1】Assume an Earl Copy Center ended the month of july 2010 with these data: Payments of cash Acquisition of equipment $420,000 Dividends 4,800 Retained earnings June 30,2010 0 Retained earnings July 31,2010 ? Utilities expense 10,000 Adjustments to reconcile Net income to net cash Provided by operations 2,200 Salary expense 167,000 Cash balance,June 30,2010 0 Cash balance, July 31,2010 10,900 Cash receipts: Issuance of shares To owners 69,500 Rent expense 2,200 Share capital 69,500 Equipment 420,000 Office supplies 14,800 Accounts payable 17,000 Service revenue 543,200 Requirement 1.Prepare the income statement and the statement of changes in equity of Earl Copy Center,Inc., for the month ended July 31,2010. 2.Prepare the balance sheet of Earl Copy Center,Inc., for the month ended July 31,2010. 3.Prepare the statement of cash flows of Earl Copy Center,Inc., for the month ended July 31,2010.Aslo explain the relationship among income statement, statement of changes in equity, balance sheet, and statement of cash flows. EARL COPY CENTER, INC. INCOME STATEMENT MONTH ENDED JULY 31, 2010 Revenue: Service revenue…………… $543,200 Expenses: Salary expense……………… $167,000 Rent expense………………… 2,200 Utilities expense……………. 10,000 Total expenses……………… 179,200 Net income……………………… $ 364,000 EARLCOPY CENTER, INC. STATEMENT OF CHANGES IN EQUITY MONTH ENDED JULY 31, 2010 Total Equity, July 1, 2010……………… $ 69,500 Add: Net income for the month………. 364,000 433,500 Less: Dividends…………………………. (4,800) Total Equity, July 31, 2010…………….. $428,700 EARL COPY CENTER, INC. BALANCE SHEET As at JULY 31, 2010 Assets Liabilities