How athena riding clubs four statements relate to each other

Assignment Help Financial Accounting

Reference no: EM13913544

Athena Riding Club's financial statements follow.

Athena riding Club Income Statement For the Month ended november 30, 2014
Revenues:
Riding lesson revenue	$4,650
Locker rental revenue	1,450
Total revenues Expenses:		$6,100
Salaries expense	$1,125
Feed expense	750
Utilities expense	450
Total expenses		2,325
Income before income taxes		$3,775
Income taxes expense		725
Net income		$3,050

Athena riding Club Statement of retained earnings For the Month ended november 30, 2014
Retained earnings, October 31, 2014	$35,475
Net income for the month	3,050
Subtotal	$38,525
Less dividends	2,400
Retained earnings, November 30, 2014	$36,125

Athena riding Club Balance Sheet november 30, 2014
Assets		Liabilities
Cash	$ 5,975	Accounts payable	$11,250
Accounts receivable	900	Stockholders' equity
Supplies	750	Common stock	$ 6,000
Land	15,750	Retained earnings	36,125
Building	22,500	Total stockholders' equity	$42,125
Horses	7,500
Total assets	$53,375	Total liabilities and stockholders' equity	$53,375

Athena riding Club Statement of Cash Flows For the Month ended November 30, 2014
Cash flows from operating activities:
Net income
Adjustments to reconcile net income to net cash flows		$3,050
from operating activities:
Increase in accounts receivable	$ (400)
Increase in supplies	(550)
Increase in accounts payable	400	(550)
Net cash flows from operating activities		$2,500
Purchase of horses	$(2,000)
Sale of horses	1,000
Net cash flows from investing activities		(1,000)
Cash flows from financing activities:
Issuance of common stock	$ 6,000
Dividends paid	(2,400)
Net cash flows from financing activities		3,600
Net increase in cash		$5,100
Cash at beginning of month		875
Cash at end of month		$5,975

Required:

1. accounting Connection- Explain how Athena Riding Club's four statements relate to each other.

2. BUsiness application- Which statements are most closely associated with the goals of liquidity and profitability? Why?

3. BUsiness application- If you were the CEO of this business, how would you evaluate the company's performance? Give specific examples.

4. accoUnting Connection- If you were a banker considering Athena Riding Club for a loan, why might you want the company to be audited by an independent CPA? What would the audit tell you?

Reference no: EM13913544

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