Problem 7-27

activities would be reported on the 2018 statement of d. What amount of total liabilities would be reported on the Dee J e. What amount of retained earnings would be reported on the December 31, 2018, balance f. What amount of cash flow from financing activities would be reported on the 20 cash flows? g. What amount of interest expense would be reported on the 2019 income statement? h. What amount of cash flows from operating activities would be reported on the 2017 statement? i. What amount of assets would be reported on the December 31, 2019, balance sheet? Problem 7-27 Accounting for short-term debt and sales tax-two accounting cycles The following transactions apply to Walnut Enterprises for 2018, its first year of operations: 1. Received $50,000 cash from the issue of a short-term note with a 6 percent interest rate and a one- year maturity. The note was made on April 1. 2018. 2. Received $130,000 cash plus applicable sales tax from performing services. The services are subject to a sales tax rate of 6 percent. 3. Paid $62,000 cash for other operating expenses during the year. 4. Paid the sales tax due on S110,000 of the service revenue for the vear. Sales tax on the balance of the revenue is not due until 2019. 5. Recognized the accrued interest at December 31, 2018. The following transactions apply to Walnut Enterprises for 2019: 1. Paid the balance of the sales tax due for 2018. 2. Received $201.000 cash plus applicable sales tax from performing services. The services are sub ject to a sales tax rate of 6 percent. 3. Repaid the principal of the note and applicable interest on April 1, 2019. 4. Paid $102.500 of other operating expenses during the year. 5. Paid the sales tax due on $185,000 of the service revenue. The sales tax on the balance of the revenue is not due until 2020. Required a. Organize the transaction data in accounts under an accounting equation. b. Prepare an income statement, a statement of changes in stockholders' equity, a balance sheet, and a statement of cash flows for 2018 and 2019. Problem 7-28 Contingent liabilities Required 2. Give an example of a contingent liability that is probable and reasonably estimable. How would this type of liability be shown in the accounting records? b. Give an example of a contingent liability that is reasonably possible or probable but not renen ably estimable. How would this type of liability be shown in the accounting records? c. Give an example of a contingent liability that is remote. How is this type of liability shown in accounting records? Problem 7-29 Current liabilities bols of Ripley Company