Middleham Co. started operation in 2014. The following balances are from the PARTIAL unadjusted trial balance on December 31, 2014. Ignore income tax in this problem.

Cash ? Loan payable 100,000
Revenues 120,000 Prepaid rent 24,000
A/P 20,000 Wage expense 30,000
Purchases 70,000 Common Shares 100,000
FV-OCI at cost 8,000 Equipment 50,000
Gains on sales of land 15,000

1 Middleham borrowed on July 1, 2014, $50,000, 5% loan. Interest and principal to be paid in full on June 30,2016

2 Middleham acquired equipment by signing a loan $50,000, 5%, interest and principal to be paid in 2015. Land was purchased for 70,000 in cash and sold after 2 months.

3 Depreciation on equipment is 10% of ending balance.

4 The fair value of the FV-OCI investment on December 31, 2014 is $5,000. No investment was traded after the acquisition on November 30, 2014.

5 The physical count reports ending inventory to be $10,000.

6 Middleham rented a store on January 1, 2014, signing a two-year agreement.

Answer the following questions:

• How much is the net income for the year ended December 31, 2014?

• What is the ending balance of cash as of December 31, 2014?

As of December 31, 2014, on the statement of Cash flow:

• How much is cash from operating activities?

• How much is cash from investing activities?

• How much is cash from financing activities?

Solution PreviewSolution Preview

This material may consist of step-by-step explanations on how to solve a problem or examples of proper writing, including the use of citations, references, bibliographies, and formatting. This material is made available for the sole purpose of studying and learning - misuse is strictly forbidden.

1        Middleham borrowed on July 1, 2014, $50,000, 5% loan. Interest and principal to be paid in full on June 30,2016
For net income calculation we need to accrue interest on the loan for 2014. Accrued interest is as follows:
Loan value 50.000
Interest rate (Annual) 5%
Annual interest 2.500
Divided by months in year 12
Times months loan held in 2014 6
Accrued interest/interest expense 1.250...
$28.00 for this solution

PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

Find A Tutor

View available Accounting Tutors

Get College Homework Help.

Are you sure you don't want to upload any files?

Fast tutor response requires as much info as possible.

Upload a file
Continue without uploading

We couldn't find that subject.
Please select the best match from the list below.

We'll send you an email right away. If it's not in your inbox, check your spam folder.

  • 1
  • 2
  • 3
Live Chats