Part A Canton Company experienced the following accounting events during 2018: 1. Canton Company…

Part A Canton Company experienced the following accounting events during 2018: Canton Company borrowed $10,000 cash from the National Bank on September 1, 2018. Canton invested the borrowed money in land. Canton leased the land and earned rent revenue of $600 cash. As of December 31, 2018, accrued interest (interest expense) on Canton’s bank loan was $400. Required Record the events under an accounting equation. Prepare an income statement, a statement of retained earnings, a balance sheet, and a statement of cash flows for 2018. Part B Canton Company experienced the following accounting events during 2019: Canton earned rent revenue of $1,350 cash in 2019. Canton sold its land for $10,000 cash. Canton accrued interest of $800 on the bank loan. Canton paid cash for the interest due on the bank loan. Canton repaid the $10,000 bank loan (See Event 1 in Part A above) with cash. Required Record the events under an accounting equation. Prepare an income statement, a statement of retained earnings, a balance sheet, and a statement of cash flows for 2019. Use WORK PAPERS FOR PROBLEM SOLUTIONS (see below)  

Work Paper, Parts A & B,

Accounting Equation

  Assets = Liab. + Equity   2018 Part A   Cash   + Land   = Notes Payable   + Int. Pay.   + Com. Stock   + Ret. Ear. Beginning Balances $       -0-   $       -0-   $       -0-   $     -0-   $     -0-   $     -0- 1. Effect of Borrowing                       2. Purch. of Land                       3. Earned Revenue                       4. Accrued Int. Exp.                                               End. / Beg. Balances $    600 + $10,000 = $10,000 + $   400 + $    -0- + $ 200 2019 Part B                       1. Earned Revenue                       2. Sold Land                       3. Accrued Int. Exp.                       4. Paid Interest                       5. Repaid Loan                         −−−−−   −−−−   −−−−   −−−−   −−−−−   −−−−− Ending Balances $    750 + $     -0- = $     -0- + $     -0- + $    -0- + $   750   ═══   ════   ════   ════   ═════   ═════  

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 Work Paper, Parts A & B, Financial Statements

Canton Company Income Statements For the Years Ended December 31,   2018   2019               Rent Revenue           Interest Expense           Net Income                       Statements of Retained Earnings Beginning Retained Earnings           Net Income           Dividends           Ending Retained Earnings   $200   $750               Balance Sheets at December 31 Assets               Cash               Land           Total Assets   $10,600   $750   Liabilities               Interest Payable               Note Payable           Equity               Retained Earnings               Total Liabilities and Equity   $10,600   $750               Statements of Cash Flows Cash Flows from Operating Activities               Inflow from Rent Revenue               Outflow for Interest Expense           Net Inflow from Operating Activities           Cash Flow from Investing Activities               Inflow from Sale of Land               Outflow for Purchase of Land           Net Inflow (Outflow) from Investing Act.           Cash Flows from Financing Activities               Inflow from Issue of Note               Outflow for Repayment of Note           Net Inflow (Outflow) from Financing Act.           Net Change in Cash           Beginning Cash Balance           Ending Cash Balance   $    600   $     750