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Answer:
Due to space limitations, I used an excel spreadsheet to answer questions a, b, c and d.
d1)
Ortho Company
Income Statements
For years 1 and 2
Year 1 Year 2
Service revenue $59,000 $85,000
Expenses ($43,000) ($62,000)
Net income $16,000 $23,000
d2)
Ortho Company
Statement of Stockholders' Equity
For years 1 and 2
Year 1 Year 2
Beginning balance $0 $77,000
Common stocks issued $68,000 $50,000
Net income $16,000 $23,000
Subtotal $84,000 $150,000
Dividends paid ($7,000) ($2,000)
Ending balance Dec. 31, year 1 $77,000 $148,000
d3)
Ortho Company
Balance Sheet
For years 1 and 2
Year 1 Year 2
Assets:
Cash $76,000 $142,000
Land $37,000 $62,000
Total assets $113,000 $204,000
Liabilities:
Notes payables $36,000 $56,000
Stockholders' Equity:
Common stock $68,000 $118,000
Retained earnings $9,000 $30,000
Total liabilities + equity $113,000 $204,000
d4)
Ortho Company
Statement of cash flows
For years 1 and 2
Year 1 Year 2
Cash flows from operating act.
Net income $16,000 $23,000
No adjustments required $0 $0
Net cash provided by OA $16,000 $23,000
Cash flows from investing act.
Purchase of land ($37,000) ($20,000)
Net cash provided by IA ($37,000) ($20,000)
Cash flows from financing act.
Issuance of common stocks $68,000 $50,000
Dividends paid ($7,000) ($2,000)
Issuance of long term debt $36,000 $20,000
Net cash provided by FA $97,000 $68,000
Net increase in cash $76,000 $66,000
Initial cash balance $0 $76,000
Ending cash balance $76,000 $142,000
a - d. Recording the transactions in an accounting equation form for Ortho Company is as follows:
Year 1: Cash + Land = Note + Common + Retained
Payable Stock Earnings
Stock issuance $68,000 $68,000
Loan $36,000 $36,000
Cash revenue $59,000 $59,000
Cash expenses -43,000 -43,000
Dividends payment -7,000 -7,000
Land purchase -37,000 $37,000
Total $76,000 $37,000 $36,000 $68,000 $9,000
Year 2: Cash + Land = Note + Common + Retained
Payable Stock Earnings
Beginning balance $76,000 $37,000 $36,000 $68,000 $9,000
Stock issuance $50,000 $50,000
Loan $20,000 $20,000
Cash revenue $85,000 $85,000
Cash expenses -62,000 -62,000
Dividends payment -2,000 -2,000
Land purchase -25,000 $25,000
Total $142,000 $62,000 $56,000 $118,000 $30,000
The appropriate titles in the Retained Earnings column are Revenue, Expenses, Dividends. Space does not permit them to be indicated on a separate column.
d-1. The Income Statements for Year 1 and Year 2 are as follows:
Year 1 Year 2
Revenue $59,000 $85,000
Expenses 43,000 62,000
Net income $16,000 $23,000
d-2. Stockholders' Equity for Year 1 and Year 2 are as follows:
Year 1 Year 2
Common stock $68,000 $68,000
Additional stock 50,000
Retained earnings $9,000
Net income $16,000 $23,000
Dividends 7,000 2,000
Retained earnings $9,000 $30,000
d-3. Balance Sheets for Year 1 and Year 2
Year 1 Year 2
Assets:
Cash $76,000 $142,000
Land 37,000 62,000
Total assets $113,000 $204,000
Liabilities:
Notes Payable $36,000 $56,000
Equity:
Common Stock $68,000 $118,000
Retained earnings 9,000 30,000
Total equity $77,000 $148,000
Total equity and
liabilities $113,000 $204,000
d-4 Statement of Cash Flows:
Operating Activities:
Year 1 Year 2
Net income $16,000 $23,000
Financing Activities:
Stock issuance $68,000 $50,000
Dividends paid -7,000 -2,000
Loan 36,000 20,000
Cash from financing $97,000 $68,000
Investing Activities:
Land purchase -$37,000 -$25,000
Net Cash Flows $76,000 $66,000
Learn more about preparing the financial statements here: https://brainly.com/question/24498019
