Financial Accounting: An Integrated Statements Approach, 2nd Edition

Chapter 2 Basic Accounting Concepts 67

increased only $280, or 9.7% ($280/$2,900). This suggests that Family Health Care’s op-

erations are profitable and expanding.

The retained earnings statement reports an increase in retained earnings of $2,220.

This increase is the result of net income ($3,220) less the dividends ($1,000) paid to

Dr. Landry.

The balance sheet shows that total assets increased from $17,100 on September 30,

2007, to $19,320 on October 31. This increase of $2,220 was due to an increase in cash

from operations of $3,220 less the dividends of $1,000 that were paid to Dr. Landry.

Exhibit 6

Family Health Care Summary of Transactions for October

Statement of Cash Flows

a. Operating 6,400

b. Operating 3,1 80

c. Financing 1,000

Increase in cash 2,220

Statement of

Cash Flows

Income

Statement

Income Statement

a. 6,400 Fees earned

b.1,370 Wages expense

950 Rent expense

540 Utilities expense

100 Interest expense

220 Misc. expense

3,220 Net income

a.

b.

INTEGRATED FINANCIAL

STATEMENT FRAMEWORK

Balances, Oct. 1

a. Fees earned

b. Paid expenses

c. Paid dividends

Balances, Oct. 31

Exhibit 7

Family Health Care
Financial Statements
for October

Family Health Care, P.C.

Income Statement

For the Month Ended October 31, 2007

Fees earned $6,400

Operating expenses:

Wages expense $1,370

Rent expense 950

Utilities expense 540

Interest expense 100

Miscellaneous expenses 220

Total operating expenses 3,180

Net income $3,220

Balance Sheet

Assets  Liabilities  Stockholders’ Equity

Notes Capital Retained

Cash  Land  Payable  Stock  Earnings

5,100 12,000 10,000 6,000 1,100

6,400 6,400

3,1 80 3,1 80

1,000 1,000

7,320 12,000 10,000 6,000 3,320