Question

required information the following information applies to the questions displayed below. cascade company was started on january 1, year 1, when it acquired $158,000 cash from the owners. during year 1, the company earned cash revenues of $85,600 and incurred cash expenses of $62,200. the company also paid cash distributions of $9,500. required prepare a year 1 income statement, capital statement (statement of changes in equity), balance sheet, and statement of cash flows under each of the following assumptions. (consider each assumption separately.) a. cascade is a sole proprietorship owned by carl cascade. complete this question by entering your answers in the tabs below. income statement statement of changes balance sheet statement of cash flows prepare a capital statement (statement of changes in equity) for year 1. note: deductions should be indicated by a minus sign.

Explanation:

Step1: Calculate net income for income statement

Net income = Cash revenues - Cash expenses
Net income = $85,600 - $62,200 = $23,400

Step2: Prepare income statement

Income Statement	Amount
Expenses	$62,200
Net Income	$23,400

Step3: Calculate ending capital for statement of changes in equity

Beginning capital = $158,000
Add: Net income = $23,400
Less: Cash distributions = $9,500
Ending capital = $158,000 + $23,400 - $9,500 = $171,900

Step4: Prepare statement of changes in equity

Statement of Changes in Equity	Amount
Add: Net Income	$23,400
Less: Cash Distributions	-$9,500
Ending Capital	$171,900

Step5: Prepare balance sheet

Balance Sheet	Amount
Liabilities	$0
Owner's Equity - Carl Cascade, Capital	$171,900

Step6: Prepare statement of cash flows

Statement of Cash Flows	Amount
Cash receipts from revenues	$85,600
Cash payments for expenses	-$62,200
Net cash from operating activities	$23,400
Cash flows from financing activities:
Cash received from owner	$158,000
Cash distributed to owner	-$9,500
Net cash from financing activities	$148,500
Net increase in cash	$171,900
Beginning cash balance	$0
Ending cash balance	$171,900

Answer:

Income Statement:

Income Statement	Amount
Expenses	$62,200
Net Income	$23,400

Statement of Changes in Equity:

Statement of Changes in Equity	Amount
Add: Net Income	$23,400
Less: Cash Distributions	-$9,500
Ending Capital	$171,900

Balance Sheet:

Balance Sheet	Amount
Liabilities	$0
Owner's Equity - Carl Cascade, Capital	$171,900

Statement of Cash Flows:

Statement of Cash Flows	Amount
Cash receipts from revenues	$85,600
Cash payments for expenses	-$62,200
Net cash from operating activities	$23,400
Cash flows from financing activities:
Cash received from owner	$158,000
Cash distributed to owner	-$9,500
Net cash from financing activities	$148,500
Net increase in cash	$171,900
Beginning cash balance	$0
Ending cash balance	$171,900