The financial statements at the end of Ruby River Realty's first month of operations are shown below.
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Ruby River Realty
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Income Statement
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For the Month Ended June 30, 2004
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Fees earned . .
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$23,500
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Operating expenses:
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Wages expense .
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$ (a)
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Rent expense . .
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4,400
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Utilities expense
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1,350
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Miscellaneous expense .
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825
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Total operating expenses .
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11,950
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Net income . .
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$ (b)
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Ruby River Realty
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Retained Earnings Statement
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For the Month Ended June 30, 2004
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Net income for June . .
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$ (c)
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Less dividends
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(d)
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Retained earnings, June 30, 2004 .
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$ (e)
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Ruby River Realty
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Balance Sheet
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June 30, 2004
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Assets
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Cash .
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$14,750
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Prepaid expenses .
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1,000
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Land .
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(f )
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Total assets . .
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$ (g)
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Liabilities
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Accounts payable .
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$ 1,200
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Stockholders' Equity
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Capital stock .
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$ (h)
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Retained earnings .
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(i)
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(j)
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Total liabilities and stockholders' equity . .
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$ (k)
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Ruby River Realty Statement of Cash Flows
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For the Month Ended June 30, 2004
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Cash flows from operating activities:
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Cash received from customers
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$ (l)
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Deduct cash payments for expenses and payments to creditors
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11,750
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Net cash flow from operating activities
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$ (m)
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Cash flows from investing activities:
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Cash payments for acquisition of land
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$ 36,000)
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Cash flows from financing activities:
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Cash received from issuing capital stock
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$45,000
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Deduct dividends
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6000
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Net cash flow from financing activities
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(n)
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Net cash flow and June 30, 2004 cash balance
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$(0)
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Instructions
1. Would you classify a realty business like Ruby River as a manufacturing, merchandising, or service business?
2. By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (o).