Question

Cascade Company was started on January 1, Year 1, when it acquired $151,000 cash from the owners. During Year 1, the company earned cash revenues of $90,600 and incurred cash expenses of $62,000. The company also paid cash distributions of $13,000.

Required:
Prepare a Year 1 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (Consider each assumption separately.)

Answer 1

Cascade Company

Income statement for the year ended year 1

Sales Revenue $90,600

Less Expenses $62,000

Net Income $28,600

Cascade Company

Statement of changes in equity for the year ended year 1

Capital Retained Income Total

Beginning of the Year :

Opening Balance $151,000 $ 0 $151,000

During the Year :

Profit for the year - $28,600 $28,600

Dividends paid - ($13,000) ($13,000)

Total $151,000 $15,600 $166,600

Cascade Company

Balance Sheet as at year 1

ASSETS

Cash ($151,000 + $90,600 - $62,000 - $13,000) $166,600

Total Assets $166,600

EQUITY AND LIABILITIES

Equity $166,600

Total Equity and Liabilities $166,600

Cascade Company

Statement of Cashflow for the year ended year 1

Cash flow from Operating Activities

Cash receipts from customers $90,600

Cash payments to suppliers and employees ($62,000)

Net Cash from Operating Activities $28,600

Cash flow from Investing Activities

No Investment activities

Net Cash from Investing Activities $0

Cash flow from financing Activities

Capital Invested $151,000

Dividends Distributions ($13,000)

Net Cash from Investing Activities $138,000

Movement during the year $166,600

Beginning Cash and Cash Equivalents $0

Ending Cash and Cash Equivalents $166,600

Step-by-step explanation:

The income statement, statement of changes in equity, balance sheet, and statement of cash flows for Cascade Company have been prepared above.

Note : Make sure to take note of the format and appropriate heading of each statement.