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Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
Edition 4ISBN: 978-0078025372 Exercise 2
Reporting Amounts on the Four Basic Financial Statements
Life Time Fitness, Inc. , reported the following information for the nine-month period ended September 30, 2010. Items are listed alphabetically and are in thousands of dollars.
Required :
Prepare the four basic financial statements for the nine months ended September 30, 2010.
TIP : Prepare the four statements in the following order:
a. Income statement
b. Statement of retained earnings
c. Balance sheet
d. Statement of cash flows
Life Time Fitness, Inc. , reported the following information for the nine-month period ended September 30, 2010. Items are listed alphabetically and are in thousands of dollars.
Required :
Prepare the four basic financial statements for the nine months ended September 30, 2010.
TIP : Prepare the four statements in the following order:
a. Income statement
b. Statement of retained earnings
c. Balance sheet
d. Statement of cash flows
Explanation
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Verified
1.
Prepare the four basic financial statements for the nine months ended September, 30, 2010:
Note: All four basic financial statements contains amount in thousands of dollars.
a. Income statement:
The first financial statement prepared is the income statement. The income statement reports the net amount that a business earned (net income) over a period of time by subtracting the costs of running the business (expenses) from the total amount earned (revenues).
b.
Statement of retained earnings:
The statement of retained earnings explains changes in the Retained Earnings account over a period of time by considering increases (from net income) and decreases (from dividends to stockholders).
Beginning retained earnings plus net income minus dividends equals to retained earnings ending balance.
c.
Balance Sheet:
Balance sheet's purpose is to report the amount of a business's assets, liabilities, and stockholders' equity at a specific point in time.
Prepare a Balance sheet at September 30, 2010:
The basic accounting equation is as follows:
Resources owned by the company called assets.
Resources owed to creditors, and to stockholders are called liabilities and stockholders' equity.
d.
The statement of cash flows is divided into three types of activities :
1. Operating activities
2. Investing activities
3. Financing activities
Statement of Cash flows:
Prepare the four basic financial statements for the nine months ended September, 30, 2010:
Note: All four basic financial statements contains amount in thousands of dollars.
a. Income statement:
The first financial statement prepared is the income statement. The income statement reports the net amount that a business earned (net income) over a period of time by subtracting the costs of running the business (expenses) from the total amount earned (revenues).
b. Statement of retained earnings:
The statement of retained earnings explains changes in the Retained Earnings account over a period of time by considering increases (from net income) and decreases (from dividends to stockholders).
Beginning retained earnings plus net income minus dividends equals to retained earnings ending balance.
c. Balance Sheet:
Balance sheet's purpose is to report the amount of a business's assets, liabilities, and stockholders' equity at a specific point in time.
Prepare a Balance sheet at September 30, 2010:
The basic accounting equation is as follows:
Resources owned by the company called assets.Resources owed to creditors, and to stockholders are called liabilities and stockholders' equity.
d. The statement of cash flows is divided into three types of activities :
1. Operating activities
2. Investing activities
3. Financing activities
Statement of Cash flows:
Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby
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