Retained earnings and the closing process LO 1-5, 1-6 As of December 31, 2014, Blue Haven Company had total assets of $180,000, total liabilities of $54,000, and common stock of $90,000. The company’s 2014 income statement contained revenue of $32,000 and expenses of $19,000. The 2014 statement of changes in stockholder’s equity stated that $2,800 of dividends were paid to investors. Required
a. Determine the before-closing balance in the Retained Earnings account on December 31, 2014
b. Determine the after-closing balance in the Retained Earnings account on December 31, 2014.
Ed Arnold started a personal financial planning business when he accepted $68,000 cash as advance payment for managing the financial assets of a large estate. Arnold agreed to manage the estate for a one-year period beginning May 1, 2014.
Required
a. Show the effects of the advance payment and revenue recognition on the 2014 financial statements using a horizontal statements model given below. In the Cash Flows column, use OA to designate operating activity, IA for investing activity, FA for financing activity, NC for net change in cash and NA if the account is not affected. (Do not round intermediate calculations and round your final answers to nearest whole number. Enter any decreases to account balances and cash outflows with a minus sign.)
b. How much revenue would Ed recognize on the 2015 income statement? (Do not round intermediate calculations and round your answers to nearest whole number.)
c. What is the amount of cash flow from operating activities in 2015?