Total liabilities remained the same, but retained earnings and stockholders’ equity in-
creased by $2,220.
The statement of cash flows shows net cash receipts from operations of $3,220 and a
cash payment for dividends of $1,000. The ending cash balance of $7,320 also appears on
the October 31 balance sheet. The integration of these statements is shown in Exhibit 8.68 Chapter 2 Basic Accounting Concepts
Exhibit 7
ConcludedFamily Health Care, P.C.
Retained Earnings Statement
For the Month Ended October 31, 2007Retained earnings, October 1, 2007 $1,100
Net income for October $3,220
Less dividends 1,000 2,220
Retained earnings, October 31, 2007 $3,320Family Health Care, P.C.
Balance Sheet
October 31, 2007Assets
Cash $ 7,320
Land 12,000
Total assets $19,320Liabilities
Notes payable $10,000Stockholders’ Equity
Capital stock $6,000
Retained earnings 3,320 9,320
Total liabilities and stockholders’ equity $19,320Family Health Care, P.C.
Statement of Cash Flows
For the Month Ended October 31, 2007Cash flows from operating activities:
Cash received from customers $ 6,400
Deduct cash payments for expenses 3,180
Net cash flow from operating activities $ 3,220
Cash flows from investing activities 0
Cash flows from financing activities:
Deduct cash dividends (1,000)
Net increase in cash $ 2,220
October 1, 2007, cash balance 5,100
October 31, 2007, cash balance $ 7,320