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Question: The Financial Statements for a Bank Savings Account (Medium) You received the following statement for 2012 for your savings account at a bank. Cash balances in the account earn interest at a 5 percent rate per annum.

This statement is effectively a statement of owner's equity for the account. It shows your starting balance, adds your earnings for the year, and subtracts your dividend (the withdrawal), to yield a closing balance.

a. Prepare an income statement, balance sheet, and cash flow statement for this account for 2012.

b. Rather than withdrawing $5 from the account, suppose you left it in the account. What would your financial statements for 2012 then look like?

c. If, before the end of the year, you instructed your bank to invest the earnings of $5 in a mutual fund (and there were no withdrawals), what would the final financial statement from the bank look like?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92295597

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