Question :

Norman Co. borrowed $15,000 from the local bank on 1^st April, 2012, when the company was started. The note had an 8 % annual interest rate and a one-year term to maturity. Norman Co. identifies $42,000 of revenue on account in 2012 and $56,000 of revenue on account in 2013. Cash collections from accounts receivable were $38,000 in 2012 and $58,000 in 2013. Norman Co. paid $26,000 of salaries expense in 2012 and $32,000 of salaries expense in 2013. Norman Co. paid the interest and loan at the maturity date.

Required

a. Classify the information in accounts under an accounting equation.

b. Evaluate net cash flow from operating activities would be reported on the 2012 cash flow statement?

c. Determine interest expense would be reported on the 2012 income statement?

d. What amount of net liabilities would be reported on the 31^st December, 2012, balance sheet?

e. Evaluate retained earnings would be reported on the 31^st December, 2012, balance sheet?

f. Evaluate cash flow from financing activities would be reported on the 2012 statement of cash flows?

g. Evaluate interest expense would be reported on the 2013 income statement?

h. Determine cash flows from operating activities would be reported on the 2013 cash flow statement?

I. What amount of assets would be reported on the 31^st December, 2013, balance sheet?