A summary of cash flows for Sentinel Travel Service for the year ended August 31, 2014

A summary of cash flows for Sentinel Travel Service for the year ended August 31, 2014,
is shown below.


Cash receipts:
Cash received from customers $734,000
Cash received from additional investment of owner 36,000
Cash payments:
Cash paid for operating expenses 745,600
Cash paid for land 50,000
Cash paid to owner for personal use 18,000


The cash balance as of September 1, 2013, was $89,000.

Prepare a statement of cash flows for Sentinel Travel Service for the year ended August 31, 2014.


Answer:

SENTINEL TRAVEL SERVICE
Statement of Cash Flows
For the Year Ended August 31, 2014
Cash flows from operating activities:
Cash received from customers $ 734,000
Deduct cash payments for operating expenses (745,600)
Net cash flows used for operating activities $(11,600)
Cash flows used for investing activities:
Cash payments for purchase of land (50,000)
Cash flows from financing activities:
Cash received from owner as investment $ 36,000
Deduct cash withdrawals by owner (18,000)
Net cash flows from financing activities 18,000
Net decrease in cash during year $(43,600)
Cash as of September 1, 2013 89,000
Cash as of August 31, 2014 $ 45,400

Using the following data for Sentinel Travel Service as well as the statement of owner’s equity shown

Using the following data for Sentinel Travel Service as well as the statement of owner’s equity shown in Practice Exercise 1-5B, prepare a balance sheet as of August 31, 2014.


Accounts payable $ 44,600
Accounts receivable 75,500
Cash 45,400
Land 310,000
Supplies 4,700



Answer:

SENTINEL TRAVEL SERVICE
Balance Sheet
August 31, 2014
Assets Liabilities
Cash $ 45,400 Accounts payable $ 44,600
Accounts receivable 75,500
Supplies 4,700 Owner’s Equity
Land 310,000 Barb Schroeder, capital 391,000
Total liabilities and
Total assets $435,600 owner’s equity $435,600

Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B

Using the income statement for Sentinel Travel Service shown in Practice Exercise 1-4B, prepare a statement of owner’s equity for the current year ended August 31, 2014. Barb Schroeder, the owner, invested an additional $36,000 in the business during the year and withdrew cash of $18,000 for personal use. Barb Schroeder, capital as of September 1, 2013, was $380,000.


Answer:

SENTINEL TRAVEL SERVICE
Statement of Owner’s Equity
For the Year Ended August 31, 2014
Barb Schroeder, capital, September 1, 2013 $380,000
Additional investment by owner during year $36,000
Net loss for the year (7,000)
$29,000
Less withdrawals 18,000
Increase in owner’s equity 11,000
Barb Schroeder, capital, August 31, 2014 $391,000

The revenues and expenses of Sentinel Travel Service for the year ended August 31,

The revenues and expenses of Sentinel Travel Service for the year ended August 31,
2014, are listed below.

Fees earned $750,000
Office expense 295,000
Miscellaneous expense 12,000
Wages expense 450,000


Prepare an income statement for the current year ended August 31, 2014.


Answer:

SENTINEL TRAVEL SERVICE
Income Statement
For the Year Ended August 31, 2014
Fees earned $750,000
Expenses:
Wages expense $450,000
Office expense 295,000
Miscellaneous expense 12,000
Total expenses 757,000
Net loss $ (7,000)