After its second year of operations, the following amounts were taken from the accounting records of Nutrition Services Inc. as of December 31, 2005. Nutrition Services began its operations on January 1, 2004 (see Problem 2–3A) and uses the cash basis of accounting.
|
Capital stock |
$ 25,000 |
|
Cash |
? |
|
Dividends |
15,000 |
|
Fees earned |
254,100 |
|
Interest expense |
1,600 |
|
Land |
140,000 |
|
Miscellaneous expense |
7,000 |
|
Notes payable |
20,000 |
|
Rent expense |
28,000 |
|
Salaries expense |
70,000 |
|
Taxes expense |
20,000 |
|
Utilities expense |
36,000 |
Instructions
1. Prepare an income statement for the year ending December 31, 2005.
2. Prepare a retained earnings statement for the year ending December 31, 2005. Note: The Retained Earnings at January 1, 2005, was $77,500.
3. Prepare a balance sheet as of December 31, 2005.
4. Prepare a statement of cash flows for the year ending December 31, 2005.
Hint: You should compare the asset and liability amounts of December 31, 2005 with those of December 31, 2004, to determine cash used in investing and financing activities. for the December 31, 2004 balance sheet amounts.