CMR 302 Assignment 5
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basicfinancialstatementsassign51.ppt© The McGraw-Hill Companies, Inc., 2002
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BASIC FINANCIAL STATEMENTS
Chapter
2
2
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Introduction to Financial Statements
Companies prepare interim financial statements and annual financial statements.
2000
X
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Introduction to Financial Statements
Three primary financial statements.
Income Statement
Balance Sheet
Statement of Cash Flows
We will use a corporation to describe these statements.
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Introduction to Financial Statements
Describes where the enterprise stands at a specific date.
Income Statement
Balance Sheet
Statement of Cash Flows
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Introduction to Financial Statements
Depicts the revenue and expenses for a designated period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
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Introduction to Financial Statements
Revenues result in positive cash flow.
Expenses result in negative cash flow.
Either in the past, present, or future.
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Introduction to Financial Statements
Net income (or net loss) is simply the difference between revenues and expenses.
Income Statement
Balance Sheet
Statement of Cash Flows
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Introduction to Financial Statements
Depicts the ways cash has changed during a designated period of time.
Income Statement
Balance Sheet
Statement of Cash Flows
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The Concept of the Business Entity
Vagabond Travel Agency
A business entity is separate from the personal affairs of its owner.
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A Starting Point: Statement of Financial Position
Sheet1
| Vagabond Travel Agency | ||||
| Balance Sheet | ||||
| December 31, 2002 | ||||
| Assets | Liabilities & Owners' Equity | |||
| Cash | $ 22,500 | Liabilities: | ||
| Notes receivable | 10,000 | Notes payable | $ 41,000 | |
| Accounts receivable | 60,500 | Accounts payable | 36,000 | |
| Supplies | 2,000 | Salaries payable | 3,000 | |
| Land | 100,000 | Total liabilities | $ 80,000 | |
| Building | 90,000 | Owners' Equity: | ||
| Office equipment | 15,000 | Capital stock | 150,000 | |
| Retained earnings | 70,000 | |||
| Total | $ 300,000 | Total | $ 300,000 |
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Assets
Assets are economic resources that are owned by the business and are expected to provide positive future cash flows.
Sheet1
| Vagabond Travel Agency | ||||
| Balance Sheet | ||||
| December 31, 2002 | ||||
| Assets | Liabilities & Owners' Equity | |||
| Cash | $ 22,500 | Liabilities: | ||
| Notes receivable | 10,000 | Notes payable | $ 41,000 | |
| Accounts receivable | 60,500 | Accounts payable | 36,000 | |
| Supplies | 2,000 | Salaries payable | 3,000 | |
| Land | 100,000 | Total liabilities | $ 80,000 | |
| Building | 90,000 | Owners' Equity: | ||
| Office equipment | 15,000 | Capital stock | 150,000 | |
| Retained earnings | 70,000 | |||
| Total | $ 300,000 | Total | $ 300,000 |
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Assets
Cost Principle
Going-Concern
Assumption
Objectivity
Principle
Stable-Dollar
Assumption
These accounting principles support cost as the basis for asset valuation.
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Liabilities
Liabilities are debts that represent negative future cash flows for the enterprise.
Sheet1
| Vagabond Travel Agency | ||||
| Balance Sheet | ||||
| December 31, 2002 | ||||
| Assets | Liabilities & Owners' Equity | |||
| Cash | $ 22,500 | Liabilities: | ||
| Notes receivable | 10,000 | Notes payable | $ 41,000 | |
| Accounts receivable | 60,500 | Accounts payable | 36,000 | |
| Supplies | 2,000 | Salaries payable | 3,000 | |
| Land | 100,000 | Total liabilities | $ 80,000 | |
| Building | 90,000 | Owners' Equity: | ||
| Office equipment | 15,000 | Capital stock | 150,000 | |
| Retained earnings | 70,000 | |||
| Total | $ 300,000 | Total | $ 300,000 |
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Owners’ Equity
Owners’ equity represents the owner’s claim to the assets of the business.
Sheet1
| Vagabond Travel Agency | ||||
| Balance Sheet | ||||
| December 31, 2002 | ||||
| Assets | Liabilities & Owners' Equity | |||
| Cash | $ 22,500 | Liabilities: | ||
| Notes receivable | 10,000 | Notes payable | $ 41,000 | |
| Accounts receivable | 60,500 | Accounts payable | 36,000 | |
| Supplies | 2,000 | Salaries payable | 3,000 | |
| Land | 100,000 | Total liabilities | $ 80,000 | |
| Building | 90,000 | Owners' Equity: | ||
| Office equipment | 15,000 | Capital stock | 150,000 | |
| Retained earnings | 70,000 | |||
| Total | $ 300,000 | Total | $ 300,000 |
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Owners’ Equity
Changes in Owners’ Equity
Owners’ Investments
Business Earnings
Payments to Owners
Business Losses
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The Accounting Equation
Assets = Liabilities + Owners’ Equity
$300,000 = $80,000 + $220,000
3
Sheet1
| Vagabond Travel Agency | ||||
| Balance Sheet | ||||
| December 31, 2002 | ||||
| Assets | Liabilities & Owners' Equity | |||
| Cash | $ 22,500 | Liabilities: | ||
| Notes receivable | 10,000 | Notes payable | $ 41,000 | |
| Accounts receivable | 60,500 | Accounts payable | 36,000 | |
| Supplies | 2,000 | Salaries payable | 3,000 | |
| Land | 100,000 | Total liabilities | $ 80,000 | |
| Building | 90,000 | Owners' Equity | ||
| Office equipment | 15,000 | Capital stock | 150,000 | |
| Retained earnings | 70,000 | |||
| Total | $ 300,000 | Total | $ 300,000 |
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Let’s analyze some transactions for JJ’s Lawn Care Service.
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On May 1, 2003, Jill Jones and her family invested $8,000 in JJ’s Lawn Care Service and received 800 shares of stock.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 1, 2003 | ||||
| Assets | Owners' Equity | |||
| Cash | $ 8,000 | Capital Stock | $ 8,000 | |
| Total | $ 8,000 | Total | $ 8,000 |
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On May 2, JJ’s purchased a riding lawn mower for $2,500 cash.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 2, 2003 | ||||
| Assets | Owners' Equity | |||
| Cash | $ 5,500 | Capital Stock | $ 8,000 | |
| Tools & Equipment | 2,500 | |||
| Total | $ 8,000 | Total | $ 8,000 |
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On May 8, JJ’s purchased a $15,000 truck.
JJ’s paid $2,000 down in cash and issued a note payable for the remaining $13,000.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 8, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 3,500 | Liabilities: | ||
| Tools & Equipment | 2,500 | Notes Payable | $ 13,000 | |
| Truck | 15,000 | Owners' Equity: | ||
| Capital Stock | 8,000 | |||
| Total | $ 21,000 | Total | $ 21,000 |
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On May 11, JJ’s purchased some repair parts for $300 on account.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 11, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 3,500 | Liabilities: | ||
| Tools & Equipment | 2,800 | Notes Payable | $ 13,000 | |
| Truck | 15,000 | Accounts Payable | 300 | |
| Total Liabilities | $ 13,300 | |||
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Total | $ 21,300 | Total | $ 21,300 |
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Jill realized she had purchased more repair parts than needed.
On May 18, JJ’s was able to sell half of the repair parts to ABC Lawns for $150, a price equal to JJ’s cost. JJ’s will receive the cash within 30 days.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 18, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 3,500 | Liabilities: | ||
| Accounts Receivable | 150 | Notes Payable | $ 13,000 | |
| Tools & Equipment | 2,650 | Accounts Payable | 300 | |
| Truck | 15,000 | Total Liabilities | $ 13,300 | |
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Total | $ 21,300 | Total | $ 21,300 |
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On May 25, ABC Lawns pays JJ’s $75 as a partial settlement of its accounts receivable.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 25, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 3,575 | Liabilities: | ||
| Accounts Receivable | 75 | Notes Payable | $ 13,000 | |
| Tools & Equipment | 2,650 | Accounts Payable | 300 | |
| Truck | 15,000 | Total Liabilities | $ 13,300 | |
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Total | $ 21,300 | Total | $ 21,300 |
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On May 28, JJ’s pays $150 of its accounts payable.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 28, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 3,425 | Liabilities: | ||
| Accounts Receivable | 75 | Notes Payable | $ 13,000 | |
| Tools & Equipment | 2,650 | Accounts Payable | 150 | |
| Truck | 15,000 | Total Liabilities | 13,150 | |
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Total | $ 21,150 | Total | $ 21,150 |
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On May 29, JJ’s recorded lawn care services provided during May of $750. All clients paid in cash.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 29, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 4,175 | Liabilities: | ||
| Accounts Receivable | 75 | Notes Payable | $ 13,000 | |
| Tools & Equipment | 2,650 | Accounts Payable | 150 | |
| Truck | 15,000 | Total Liabilities | 13,150 | |
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Retained Earnings | 750 | |||
| Total | $ 21,900 | Total | $ 21,900 |
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Now, let’s review how JJ’s transactions affected the accounting equation.
On May 31, JJ’s purchased gasoline for the lawn mower and the truck for $50 cash.
3
Sheet1
| JJ's Lawn Care Service | ||||
| Balance Sheet | ||||
| May 31, 2003 | ||||
| Assets | Liabilities and Owners' Equity | |||
| Cash | $ 4,125 | Liabilities: | ||
| Accounts Receivable | 75 | Notes Payable | $ 13,000 | |
| Tools & Equipment | 2,650 | Accounts Payable | 150 | |
| Truck | 15,000 | Total Liabilities | 13,150 | |
| Owners' Equity: | ||||
| Capital Stock | 8,000 | |||
| Retained Earnings | 700 | |||
| Total | $ 21,850 | Total | $ 21,850 |
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3
Sheet1
| Assets | = | Liabilities | + | Stockholders' Equity | ||||||||||||
| Cash | + | Accts. Rec. | + | Tools & Equip. | + | Truck | = | Notes Payable | + | Accts. Pay. | + | Capital Stock | Retained Earnings |
Sheet2
| Assets | = | Liabilities | + | Owners' Equity | |||||||||||||
| Cash | + | Accts. Rec. | + | Tools & Equip. | + | Truck | = | Notes Payable | + | Accts. Pay. | + | Capital Stock | + | Retained Earnings | |||
| May 1 | $ 8,000 | $ 8,000 | |||||||||||||||
| Balances | $ 8,000 | $ 8,000 | |||||||||||||||
| May 2 | (2,500) | $ 2,500 | |||||||||||||||
| Balances | $ 5,500 | $ 2,500 | $ 8,000 | ||||||||||||||
| May 8 | (2,000) | $ 15,000 | $ 13,000 | ||||||||||||||
| Balances | $ 3,500 | $ 2,500 | $ 15,000 | $ 13,000 | $ 8,000 | ||||||||||||
| May 11 | 300 | $ 300 | |||||||||||||||
| Balances | $ 3,500 | $ 2,800 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | |||||||||||
| May 18 | $ 150 | (150) | |||||||||||||||
| Balances | $ 3,500 | $ 150 | $ 2,650 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | ||||||||||
| May 25 | 75 | (75) | |||||||||||||||
| Balances | $ 3,575 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | ||||||||||
| May 28 | (150) | (150) | |||||||||||||||
| Balances | $ 3,425 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | ||||||||||
| May 29 | 750 | 750 | |||||||||||||||
| Balances | $ 4,175 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | $ 750 | |||||||||
| May 31 | (50) | (50) | |||||||||||||||
| Balances | $ 4,125 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | $ 700 |
Sheet3
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Let’s prepare the Income Statement and Statement of Cash Flows for JJ’s Lawn Care Service for the month ending May 31, 2003.
These transactions impact the Statement of Cash Flows.
These transactions impact the Income Statement.
3
Sheet1
| Assets | = | Liabilities | + | Stockholders' Equity | ||||||||||||
| Cash | + | Accts. Rec. | + | Tools & Equip. | + | Truck | = | Notes Payable | + | Accts. Pay. | + | Capital Stock | Retained Earnings |
Sheet2
| Assets | = | Liabilities | + | Owners' Equity | |||||||||||||
| Cash | + | Accts. Rec. | + | Tools & Equip. | + | Truck | = | Notes Payable | + | Accts. Pay. | + | Capital Stock | + | Retained Earnings | |||
| May 1 | $ 8,000 | $ 8,000 | |||||||||||||||
| Balances | $ 8,000 | $ 8,000 | |||||||||||||||
| May 2 | (2,500) | $ 2,500 | |||||||||||||||
| Balances | $ 5,500 | $ 2,500 | $ 8,000 | ||||||||||||||
| May 8 | (2,000) | $ 15,000 | $ 13,000 | ||||||||||||||
| Balances | $ 3,500 | $ 2,500 | $ 15,000 | $ 13,000 | $ 8,000 | ||||||||||||
| May 11 | 300 | $ 300 | |||||||||||||||
| Balances | $ 3,500 | $ 2,800 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | |||||||||||
| May 18 | $ 150 | (150) | |||||||||||||||
| Balances | $ 3,500 | $ 150 | $ 2,650 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | ||||||||||
| May 25 | 75 | (75) | |||||||||||||||
| Balances | $ 3,575 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 300 | $ 8,000 | ||||||||||
| May 28 | (150) | (150) | |||||||||||||||
| Balances | $ 3,425 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | ||||||||||
| May 29 | 750 | 750 | |||||||||||||||
| Balances | $ 4,175 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | $ 750 | |||||||||
| May 31 | (50) | (50) | |||||||||||||||
| Balances | $ 4,125 | $ 75 | $ 2,650 | $ 15,000 | $ 13,000 | $ 150 | $ 8,000 | $ 700 |
Sheet3
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Investments by and payments to the owners are not included on the Income Statement.
3
Sheet1
| JJ's Lawn Care Service | |
| Income Statement | |
| For the Month Ended May 31, 2003 | |
| Sales Revenue | $ 750 |
| Operating Expense: | |
| Gasoline Expense | 50 |
| Net Income | $ 700 |
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3
Sheet1
| JJ's Lawn Care Service | |||
| Statement of Cash Flows | |||
| For the Month Ended May 31, 2003 | |||
| Cash flows from operating activities: | |||
| Cash received from revenue transactions | $ 750 | ||
| Cash paid for expenses | (50) | ||
| Net cash provided by operating activities | $ 700 | ||
| Cash flows from investing activities: | |||
| Purchase of lawn mower | $ (2,500) | ||
| Purchase of truck | (2,000) | ||
| Collection for sale of repair parts | 75 | ||
| Payment for repair parts | (150) | ||
| Net cash used by investing activities | (4,575) | ||
| Cash flows from financing activities: | |||
| Investment by owners | 8,000 | ||
| Increase in cash for month | $ 4,125 | ||
| Cash balance, May 1, 2003 | - 0 | ||
| Cash balance, May 31, 2003 | $ 4,125 |
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Operating activities include the cash effects of revenue and expense transactions.
3
Sheet1
| JJ's Lawn Care Service | |||
| Statement of Cash Flows | |||
| For the Month Ended May 31, 2003 | |||
| Cash flows from operating activities: | |||
| Cash received from revenue transactions | $ 750 | ||
| Cash paid for expenses | (50) | ||
| Net cash provided by operating activities | $ 700 | ||
| Cash flows from investing activities: | |||
| Purchase of lawn mower | $ (2,500) | ||
| Purchase of truck | (2,000) | ||
| Collection for sale of repair parts | 75 | ||
| Payment for repair parts | (150) | ||
| Net cash used by investing activities | (4,575) | ||
| Cash flows from financing activities: | |||
| Investment by owners | 8,000 | ||
| Increase in cash for month | $ 4,125 | ||
| Cash balance, May 1, 2003 | - 0 | ||
| Cash balance, May 31, 2003 | $ 4,125 |
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Investing activities include the cash effects of purchasing and selling assets.
3
Sheet1
| JJ's Lawn Care Service | |||
| Statement of Cash Flows | |||
| For the Month Ended May 31, 2003 | |||
| Cash flows from operating activities: | |||
| Cash received from revenue transactions | $ 750 | ||
| Cash paid for expenses | (50) | ||
| Net cash provided by operating activities | $ 700 | ||
| Cash flows from investing activities: | |||
| Purchase of lawn mower | $ (2,500) | ||
| Purchase of truck | (2,000) | ||
| Collection for sale of repair parts | 75 | ||
| Payment for repair parts | (150) | ||
| Net cash used by investing activities | (4,575) | ||
| Cash flows from financing activities: | |||
| Investment by owners | 8,000 | ||
| Increase in cash for month | $ 4,125 | ||
| Cash balance, May 1, 2003 | - 0 | ||
| Cash balance, May 31, 2003 | $ 4,125 |
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Financing activities include the cash effects of transactions with the owners and creditors.
3
Sheet1
| JJ's Lawn Care Service | |||
| Statement of Cash Flows | |||
| For the Month Ended May 31, 2003 | |||
| Cash flows from operating activities: | |||
| Cash received from revenue transactions | $ 750 | ||
| Cash paid for expenses | (50) | ||
| Net cash provided by operating activities | $ 700 | ||
| Cash flows from investing activities: | |||
| Purchase of lawn mower | $ (2,500) | ||
| Purchase of truck | (2,000) | ||
| Collection for sale of repair parts | 75 | ||
| Payment for repair parts | (150) | ||
| Net cash used by investing activities | (4,575) | ||
| Cash flows from financing activities: | |||
| Investment by owners | 8,000 | ||
| Increase in cash for month | $ 4,125 | ||
| Cash balance, May 1, 2003 | - 0 | ||
| Cash balance, May 31, 2003 | $ 4,125 |
© The McGraw-Hill Companies, Inc., 2002
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Relationships Among Financial Statements
Beginning of period
End of period
Balance Sheet
Balance Sheet
Time
Income Statement
Statement of Cash Flows
3
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Forms of Business Organizations
Sole Proprietorship
Partnership
Corporation
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Reporting Ownership Equity in the Balance Sheet
Sole Proprietorship
Partnership
Corporation
Sheet: Sheet1
Owner's equity:
Jill Jones, capital
8000.0
Sheet: Sheet1
Partners' equity
Jill Jones, capital
4000.0
Bill Jones, capital
4000.0
Total partners' equity
8000.0
Sheet1
| Owners' equity | |||
| Capital stock | $ 7,000 | ||
| Retained earnings | 1,000 | ||
| Total stockholders' equity | $ 8,000 |
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The Use of Financial Statements by Outsiders
Creditors
Investors
Two concerns:
Solvency
Profitability
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The Need for Adequate Disclosure
Notes to the financial statements often provide facts necessary for the proper interpretation of the statements.
Income Statement
Balance Sheet
Statement of Cash Flows
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End of Chapter 2
4
Vagabond Travel Agency
Balance Sheet
December 31, 2002
AssetsLiabilities & Owners' Equity
Cash22,500$ Liabilities:
Notes receivable10,000 Notes payable41,000$
Accounts receivable60,500 Accounts payable36,000
Supplies2,000 Salaries payable3,000
Land100,000 Total liabilities80,000$
Building90,000 Owners' Equity:
Office equipment15,000 Capital stock150,000
Retained earnings70,000
Total300,000$ Total300,000$
Vagabond Travel Agency
Balance Sheet
December 31, 2002
AssetsLiabilities & Owners' Equity
Cash22,500$ Liabilities:
Notes receivable10,000 Notes payable41,000$
Accounts receivable60,500 Accounts payable36,000
Supplies2,000 Salaries payable3,000
Land100,000 Total liabilities80,000$
Building90,000 Owners' Equity:
Office equipment15,000 Capital stock150,000
Retained earnings70,000
Total300,000$ Total300,000$
Vagabond Travel Agency
Balance Sheet
December 31, 2002
AssetsLiabilities & Owners' Equity
Cash22,500$ Liabilities:
Notes receivable10,000 Notes payable41,000$
Accounts receivable60,500 Accounts payable36,000
Supplies2,000 Salaries payable3,000
Land100,000 Total liabilities80,000$
Building90,000 Owners' Equity:
Office equipment15,000 Capital stock150,000
Retained earnings70,000
Total300,000$ Total300,000$
Vagabond Travel Agency
Balance Sheet
December 31, 2002
AssetsLiabilities & Owners' Equity
Cash22,500$ Liabilities:
Notes receivable10,000 Notes payable41,000$
Accounts receivable60,500 Accounts payable36,000
Supplies2,000 Salaries payable3,000
Land100,000 Total liabilities80,000$
Building90,000 Owners' Equity:
Office equipment15,000 Capital stock150,000
Retained earnings70,000
Total300,000$ Total300,000$
Vagabond Travel Agency
Balance Sheet
December 31, 2002
AssetsLiabilities & Owners' Equity
Cash22,500$ Liabilities:
Notes receivable10,000 Notes payable41,000$
Accounts receivable60,500 Accounts payable36,000
Supplies2,000 Salaries payable3,000
Land100,000 Total liabilities80,000$
Building90,000 Owners' Equity
Office equipment15,000 Capital stock150,000
Retained earnings70,000
Total300,000$ Total300,000$
JJ's Lawn Care Service
Balance Sheet
May 1, 2003
Assets
Cash8,000$ Capital Stock8,000$
Total8,000$ Total8,000$
Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 2, 2003
Assets
Cash5,500$ Capital Stock8,000$
Tools & Equipment2,500
Total8,000$ Total8,000$
Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 8, 2003
Assets
Cash3,500$ Liabilities:
Tools & Equipment2,500 Notes Payable13,000$
Truck15,000 Owners' Equity:
Capital Stock8,000
Total21,000$ Total21,000$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 11, 2003
Assets
Cash3,500$ Liabilities:
Tools & Equipment2,800 Notes Payable13,000$
Truck15,000 Accounts Payable300
Total Liabilities13,300$
Owners' Equity:
Capital Stock8,000
Total21,300$ Total21,300$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 18, 2003
Assets
Cash3,500$ Liabilities:
Accounts Receivable150 Notes Payable13,000$
Tools & Equipment2,650 Accounts Payable300
Truck15,000 Total Liabilities13,300$
Owners' Equity:
Capital Stock8,000
Total21,300$ Total21,300$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 25, 2003
Assets
Cash3,575$ Liabilities:
Accounts Receivable75 Notes Payable13,000$
Tools & Equipment2,650 Accounts Payable300
Truck15,000 Total Liabilities13,300$
Owners' Equity:
Capital Stock8,000
Total21,300$ Total21,300$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 28, 2003
Assets
Cash3,425$ Liabilities:
Accounts Receivable75 Notes Payable13,000$
Tools & Equipment2,650 Accounts Payable150
Truck15,000 Total Liabilities13,150
Owners' Equity:
Capital Stock8,000
Total21,150$ Total21,150$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 29, 2003
Assets
Cash4,175$ Liabilities:
Accounts Receivable75 Notes Payable13,000$
Tools & Equipment2,650 Accounts Payable150
Truck15,000 Total Liabilities13,150
Owners' Equity:
Capital Stock8,000
Retained Earnings750
Total21,900$ Total21,900$
Liabilities and Owners' Equity
JJ's Lawn Care Service
Balance Sheet
May 31, 2003
Assets
Cash4,125$ Liabilities:
Accounts Receivable75 Notes Payable13,000$
Tools & Equipment2,650 Accounts Payable150
Truck15,000 Total Liabilities13,150
Owners' Equity:
Capital Stock8,000
Retained Earnings700
Total21,850$ Total21,850$
Liabilities and Owners' Equity
Assets=Liabilities+
Cash+
Accts.
Rec.+
Tools &
Equip.+Truck=
Notes
Payable+
Accts.
Pay.+
Capital
Stock+
Retained
Earnings
May 18,000$ 8,000$
Balances8,000$ 8,000$
May 2(2,500) 2,500$
Balances5,500$ 2,500$ 8,000$
May 8(2,000) 15,000$ 13,000$
Balances3,500$ 2,500$ 15,000$ 13,000$ 8,000$
May 11300 300$
Balances3,500$ 2,800$ 15,000$ 13,000$ 300$ 8,000$
May 18150$ (150)
Balances3,500$ 150$ 2,650$ 15,000$ 13,000$ 300$ 8,000$
May 2575 (75)
Balances3,575$ 75$ 2,650$ 15,000$ 13,000$ 300$ 8,000$
May 28(150) (150)
Balances3,425$ 75$ 2,650$ 15,000$ 13,000$ 150$ 8,000$
May 29750 750
Balances4,175$ 75$ 2,650$ 15,000$ 13,000$ 150$ 8,000$ 750$
May 31(50) (50)
Balances4,125$ 75$ 2,650$ 15,000$ 13,000$ 150$ 8,000$ 700$
Owners' Equity
JJ's Lawn Care Service
Income Statement
For the Month Ended May 31, 2003
Sales Revenue750$
Operating Expense:
Gasoline Expense50
Net Income700$
JJ's Lawn Care Service
Statement of Cash Flows
For the Month Ended May 31, 2003
Cash flows from operating activities:
Cash received from revenue transactions750$
Cash paid for expenses(50)
Net cash provided by operating activities700$
Cash flows from investing activities:
Purchase of lawn mower(2,500)$
Purchase of truck(2,000)
Collection for sale of repair parts75
Payment for repair parts(150)
Net cash used by investing activities(4,575)
Cash flows from financing activities:
Investment by owners8,000
Increase in cash for month4,125$
Cash balance, May 1, 2003-
Cash balance, May 31, 20034,125$
JJ's Lawn Care Service
Statement of Cash Flows
For the Month Ended May 31, 2003
Cash flows from operating activities:
Cash received from revenue transactions750$
Cash paid for expenses(50)
Net cash provided by operating activities700$
Cash flows from investing activities:
Purchase of lawn mower(2,500)$
Purchase of truck(2,000)
Collection for sale of repair parts75
Payment for repair parts(150)
Net cash used by investing activities(4,575)
Cash flows from financing activities:
Investment by owners8,000
Increase in cash for month4,125$
Cash balance, May 1, 2003-
Cash balance, May 31, 20034,125$
JJ's Lawn Care Service
Statement of Cash Flows
For the Month Ended May 31, 2003
Cash flows from operating activities:
Cash received from revenue transactions750$
Cash paid for expenses(50)
Net cash provided by operating activities700$
Cash flows from investing activities:
Purchase of lawn mower(2,500)$
Purchase of truck(2,000)
Collection for sale of repair parts75
Payment for repair parts(150)
Net cash used by investing activities(4,575)
Cash flows from financing activities:
Investment by owners8,000
Increase in cash for month4,125$
Cash balance, May 1, 2003-
Cash balance, May 31, 20034,125$
JJ's Lawn Care Service
Statement of Cash Flows
For the Month Ended May 31, 2003
Cash flows from operating activities:
Cash received from revenue transactions750$
Cash paid for expenses(50)
Net cash provided by operating activities700$
Cash flows from investing activities:
Purchase of lawn mower(2,500)$
Purchase of truck(2,000)
Collection for sale of repair parts75
Payment for repair parts(150)
Net cash used by investing activities(4,575)
Cash flows from financing activities:
Investment by owners8,000
Increase in cash for month4,125$
Cash balance, May 1, 2003-
Cash balance, May 31, 20034,125$
Owner's equity:
Jill Jones, capital
8,000
$
Partners' equity
Jill Jones, capital
4,000
$
Bill Jones, capital
4,000
Total partners' equity
8,000
$
Owners' equity
Capital stock7,000$
Retained earnings1,000
Total stockholders' equity8,000$
