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At the end of Year 1 Bowers Company had $6,000 of assets, $2,000 of liabilities, $3,000 of common stock, and $1,000 of retained earnings. During Year 2 Bowers experienced the following events.
(1) Borrowed $4,000 cash.
(2) Earned $5,000 of cash revenue.
(3) Paid $3,000 of cash expenses.
(4) Paid $7,000 cash to purchase land
a. what is net income
b. what is CF from IA
c. what is total L?

Respuesta :

Zviko

Answer:

a.$2,000

b.($7,000)

c.$2,000

Explanation:

Calculation of Net Income

Revenue                        $5,000

Less Expenses             ($3,000)

Net Income or (Loss)     $2,000

Cash Flow from Investing Activities

Purchases of Land                            ($7,000)

Net Cash from Investing Activities  ($7,000)

Calculation of Total Liabilities

Opening Balance (Year 1)                  $2,000

Cash Borrowed during Year 2        $4,000

Total Liabilities                                  $6,000

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