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E1-1 Reporting Amounts on the Four Basic Financial Statements [LO 1-2) Using the following
table and the eqtations underlying each of the four basic financial statements, show (a) that the
balance sheet is in balance, (b) that net income is properly calculated, (c) what caused changes in
the retained earnings account, and (d) what caused changes in the cash account. (Cash outflows
should be indicated with a minus sign.) $19,900 14,600 . Assets Stockholders' Equity 5,300
12,200 10,050 2,150 Net Income Dividends Beginning Retained Earnings Ending Retained
Eamings Cash Flows from Operating Activities Cash Flows from Investing Activities Cash
Flows from Financing Activities Beginning Cash Ending Cash 5,200 6,500 3,300 (2,700) (1,750)
2,700 1,550 b. d.
Solution
a Assets = Liabilities+Stockholder's equity =14600+5300 Assets
reported = 19900 b Net income = Revenue-Expenses
=12200-10050 Net income reported = 2150 c Ending
Retained earnings = Beginning Retained Earnings+Net income-Dividends =5200+2150-
850 = 6500 d Ending Cash = Beginning Cash+Cash Flows from
Operating Activities+Cash Flows from Investing Activities+Cash Flows from Financing
Activities =2700+3300+(2700)+(1750)=1550

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