ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 1 Accounting Information for Business decisions Dr. Fred Barbee Solution to Problem #1

The following information is available for the XYZ Company:

Assets	$152,000
Cash inflows from operating activities	105,000
Cash outflows from financing activities	(44,000)
Cash outflows from investing activities	(84,000)
Costs and Expenses	43,000
Retained earnings, December 31, 2001	12,000
Retained earnings, December 31, 2002	???
Liabilities	28,000
Revenues	135,000
Dividends	(30,000)
Common stock	50,000

Using the above information prepare an Income Statement, Statement of Retained Earnings, and Statement of Cash Flows for the XYZ Company's calendar year 2002. Also prepare its Balance Sheet at December 31, 2002.

Solution

XYZ Company Income Statement For the Year Ended December 31, 2002
Revenues		$135,000
Costs and Expenses		43,000
Net Income		$92,000

XYZ Company Statement of Retained Earnings For the Year Ended December 31, 2002
Retained Earnings December 31, 2001		$12,000
Add Net Income		92,000
Less Dividends		(30,000)
Retained Earnings December 31, 2002		$74,000

XYZ Company Balance Sheet December 31, 2002
Assets		$152,000
Liabilities		$28,000
Common Stock	$50,000
Retained Earnings	74,000	124,000
Total Liabilities and Equity		$152,000

XYZ Company Statement of Cash Flows For the Year Ended December 31, 2002
Cash Flows From Operating Activities		$105,000
Cash Used by Investing Activities		(84,000)
Cash Used by Financing Activities		(44,000)
Net Decrease in Cash		$23,000