Problem - Interrelationships among financial statements
Crawford Enterprises started the 2014 accounting period with $75,000 of assets (all cash), $15,000 of liabilities, and $25,000 of common stock. During the year, Crawford earned cash revenues of $46,000, paid cash expenses of $26,000, and paid a cash dividend to stockholders of $5,000. Crawford also acquired $15,000 of additional cash from the sale of common stock and paid $10,000 cash to reduce the liability owed to a bank.
a. Create an income statement, statement of changes in stockholders' equity, period-end balance sheet, and statement of cash flows for the 2014 accounting period. (Hint: Determine the amount of beginning retained earnings before considering the effects of the current period events. It also might help to record all events under an accounting equation before preparing the statements.)
b. Determine the percentage of total assets that were provided by creditors, investors, and earnings.
c. Determine the balance in the Revenue, Expense, and Dividends accounts as of January 1, 2015.