8) Adam Key started a lock service out of his house. It is profitable, but the latest statement of changes in shareholders' equity shows a decrease. Review the statement and advise Adam on what the business should do.
Adam Key's Locks
Statement of Changes in Shareholders' Equity
For the Month of September 30, 2012
Beginning contributed capital$40,000
Add; Capital contributed during the month 0
Ending contributed capital$40,000
Beginning retained earnings$27,000
Add; Net income3,000
Less; dividends(3,500)
Ending retained earnings$26,500
9) Tina is worried about the current financial state of Team Shirts, Inc. Her latest statement of cash flows shows a net decrease in cash. Review and analyze the following summary statement. Is Tina's business in trouble? Should she be worried? What should she do to improve the cash flow situation?
Team Shirts, Inc.
Statement of Cash Flows
For the Month of March 31, 2012
Cash from operating activities;$ 1,200
Cash used for investing activities;(1,650)
Cash used for financing activities;(2,000)
Net decrease in cash$(2,450)
10) Examine the balance sheet for Out of Africa. Make any changes that you believe are necessary for a proper presentation, and then prepare a corrected balance sheet.
Out of Africa
Balance Sheet
For the Month Ended October 31, 2012
AssetsLiabilities
Accounts payable$ 1,850Accounts receivable$2,700
Retained earnings21,650
Store equipment15,000Shareholders' equity
Inventory8,950Cash6,850
Contributed capital10,000
Total assets25,800Total liabilities and shareholders' equity19,550