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Teaching Since: May 2017
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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 23 Aug 2017 My Price 12.00

Athena Riding Club

Use and Interpretation of Financial Statements

 

p5. Athena Riding Club’s financial statements follow.

 

 

 

Athena riding Club Income Statement

 

For the Month ended november 30, 2014

 

 

 

 

Revenues:

 

 

 

Riding lesson revenue

$4,650

 

Locker rental revenue

1,450

Total revenues Expenses:

 

 

$6,100

Salaries expense

$1,125

 

 

Feed expense

750

 

 

Utilities expense

450

 

 

Total expenses

 

 

2,325

Income before income taxes

 

 

$3,775

Income taxes expense

 

 

725

Net income

 

 

$3,050

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Athena riding Club Statement of retained earnings

 

For the Month ended november 30, 2014

 

 

 

Retained earnings, October 31, 2014

$35,475

Net income for the month

3,050

Subtotal

$38,525

Less dividends

2,400

Retained earnings, November 30, 2014

$36,125

 

 

 

 

Athena riding Club Balance Sheet november 30, 2014

 

 

 

Assets

 

Liabilities

 

Cash

$  5,975

Accounts payable

$11,250

Accounts receivable

900

Stockholders’ equity

 

Supplies

750

Common stock

$  6,000

Land

15,750

Retained earnings

  36,125

Building

22,500

Total stockholders’ equity

$42,125

Horses

     7,500

 

 

Total assets

$53,375

Total liabilities and stockholders’ equity

$53,375

 

 

 

Athena riding Club Statement of Cash Flows

 

For the Month ended november 30, 2014

 

 

 

 

Cash flows from operating activities:

 

 

 

Net income

Adjustments to reconcile net income to net cash flows

 

$3,050

from operating activities:

 

 

Increase in accounts receivable

$   (400)

 

Increase in supplies

(550)

 

Increase in accounts payable

      400

     (550)

Net cash flows from operating activities

 

$2,500

 

Cash flows from investing activities:

 

 

 

Purchase of horses

$(2,000)

 

Sale of horses

    1,000

Net cash flows from investing activities

 

(1,000)

Cash flows from financing activities:

 

 

Issuance of common stock

$ 6,000

 

Dividends paid

   (2,400)

 

Net cash flows from financing activities

 

  3,600

Net increase in cash

 

$5,100

Cash at beginning of month

 

      875

Cash at end of month

 

$5,975

 

 

 

reQUIreD

 

1.    aCCoUnting ConneCtion ▶ Explain how Athena Riding Club’s four statements relate to each other.

 

2.    BUsiness appliCation ▶ Which statements are most closely associated with the goals of liquidity and profitability? Why?

 

3.    BUsiness appliCation ▶ If you were the CEO of this business, how would you evaluate the company’s performance? Give specific examples.

 

4.    aCCoUnting ConneCtion ▶ If you were a banker considering Athena Riding Club for a loan, why might you want the company to be audited by an independent CPA? What would the audit tell you?

 

 

 

 

 

 

 

Use and Interpretation of Financial Statements

p5. Athena Riding Club’s financial statements follow.

 

 

Athena riding Club Income Statement

For the Month ended november 30, 2014

 

Revenues:

 

Riding lesson revenue

$4,650

 

Locker rental revenue

1,450

Total revenues Expenses:

 

 

$6,100

Salaries expense

$1,125

 

 

Feed expense

750

 

 

Utilities expense

450

 

 

Total expenses

 

 

2,325

Income before income taxes

 

 

$3,775

Income taxes expense

 

 

725

Net income

 

 

$3,050

 

 

 

 

 

 

 

 

Athena riding Club Statement of retained earnings

For the Month ended november 30, 2014

 

Retained earnings, October 31, 2014

$35,475

Net income for the month

3,050

Subtotal

$38,525

Less dividends

2,400

Retained earnings, November 30, 2014

$36,125

 

Athena riding Club Balance Sheet november 30, 2014

 

Assets

 

Liabilities

 

Cash

$  5,975

Accounts payable

$11,250

Accounts receivable

900

Stockholders’ equity

 

Supplies

750

Common stock

$  6,000

Land

15,750

Retained earnings

  36,125

Building

22,500

Total stockholders’ equity

$42,125

Horses

     7,500

 

 

Total assets

$53,375

Total liabilities and stockholders’ equity

$53,375

 

Athena riding Club Statement of Cash Flows

For the Month ended november 30, 2014

 

Cash flows from operating activities:

 

Net income

Adjustments to reconcile net income to net cash flows

 

$3,050

from operating activities:

 

 

Increase in accounts receivable

$   (400)

 

Increase in supplies

(550)

 

Increase in accounts payable

      400

     (550)

Net cash flows from operating activities

 

$2,500

Cash flows from investing activities:

 

Purchase of horses

$(2,000)

 

Sale of horses

    1,000

Net cash flows from investing activities

 

(1,000)

Cash flows from financing activities:

 

 

Issuance of common stock

$ 6,000

 

Dividends paid

   (2,400)

 

Net cash flows from financing activities

 

  3,600

Net increase in cash

 

$5,100

Cash at beginning of month

 

      875

Cash at end of month

 

$5,975

 

reQUIreD

1.    aCCoUnting ConneCtion ▶ Explain how Athena Riding Club’s four statements relate to each other.

2.    BUsiness appliCation ▶ Which statements are most closely associated with the goals of liquidity and profitability? Why?

3.    BUsiness appliCation ▶ If you were the CEO of this business, how would you evaluate the company’s performance? Give specific examples.

4.    aCCoUnting ConneCtion ▶ If you were a banker considering Athena Riding Club for a loan, why might you want the company to be audited by an independent CPA? What would the audit tell you?

 

 

 

 

 

 

 

 

 

Answers

Maurice Tutor
(5)
Status NEW Posted 23 Aug 2017 10:08 PM My Price 12.00

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