The financial statements at the end of Atlas Realty’s first month of operations follow:

The financial statements at the end of Atlas Realty’s first month of operations follow:

Atlas Realty Income Statement For the Month Ended May 31, 2019

Fees earned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $400,000 Expenses: Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $    (a) Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,000 Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,600 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,400 Miscellaneous expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      4,800 Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 288,000 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $          (b) Atlas Realty Statement of Owner’s Equity For the Month Ended May 31, 2019 LuAnn Martin, capital, May 1, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $        (c) Investment on May 1, 2019. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $      (d) Net income for May . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (e) Withdrawals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (f ) Increase in owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(g) LuAnn Martin, capital, May 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $      (h) Atlas Realty Balance Sheet May 31, 2019 Assets Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123,200 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,800 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (i) Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $          ( j) Liabilities Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $   48,000 Owner’s Equity LuAnn Martin, capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (k) Total liabilities and owner’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $            (l) Atlas Realty Statement of Cash Flows  For the Month Ended May 31, 2019 Cash flows from operating activities: Cash receipts from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $        (m) Cash payments for expenses and payments to creditors . . . . . . . . . . .   (252,800) Net cash flow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . $            (n) Cash flows from investing activities: Cash payments for acquisition of land . . . . . . . . . . . . . . . . . . . . . . . . . . .(120,000) Cash flows from financing activities: Cash receipt of owner’s investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $  160,000 Cash withdrawals by owner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (64,000) Net cash flow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .(o) Net increase (decrease) in cash and May 31, 2019, cash balance. . . . . . . $              (p)

Instructions

By analyzing the interrelationships among the four financial statements, determine the proper amounts for (a) through (p).

Answer:

a. Wages expense, $203,200 ($288,000 – $48,000 – $17,600 – $14,400 – $4,800)

b. Net income, $112,000 ($400,000 – $288,000)

c. LuAnn Martin, capital, May 1, 2019, $0; Atlas Realty was organized on May 1, 2019.

d. Investment on May 1, 2019, $160,000; from statement of cash flows

e. Net income for May, $112,000; from (b)

f. Withdrawals, $64,000; from statement of cash flows

g. Increase in owner’s equity, $208,000 ($160,000 + $112,000 – $64,000)

h. LuAnn Martin, capital, May 31, 2019, $208,000

i. Land, $120,000; from statement of cash flows

j. Total assets, $256,000 ($123,200 + $12,800 + $120,000)

k. LuAnn Martin, capital, $208,000

l. Total liabilities and owner’s equity, $256,000 ($48,000 + $208,000)

m. Cash received from customers, $400,000; this is the same as fees earned since there are no accounts receivable.

n. Net cash flow from operating activities, $147,200 ($400,000 – $252,800)

o. Net cash flow from financing activities, $96,000 ($160,000 – $64,000)

p. Net increase in cash and May 31, 2019, cash balance, $123,200 ($147,200 – $120,000 + $96,000); also, the cash balance on the balance sheet