1. Prepare an income statement for 2021.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
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The following information for the year ended December 31, 2021, was reported by Nice Bite, Incorporated
Accounts Payable
Accounts Receivable
Cash (balance on January 1, 2021)
Cash (balance on December 31, 2021)
Common Stock
Dividends
Equipment
Income Tax Expense
Interest Expense
Inventory
Notes Payable
office Expense
Prepaid Rent
Retained Barnings (beginning)
Salaries and Hages Expanse
Service Revenue
Utilities Expense
Salaries and Wages Payable
Other cash flow information:
Cash from issuing connon stock
Cash paid to reacquire common stock
Cash paid for income taxes
cash paid to purchase long-term assets
Cash paid to suppliers and employees
Cash received from customers
Revenues
Expenses
$ 46,000
23,800
90,400
78,000
152,500
137,700
10,200
29,600
17,300
25,000
1. Prepare an income statement for 2021.
14,400
7,100
6,800
35,800
139,800
25,200
9,000
Total Expenses
Net Income
Service Revenue
Salaries and Wages Expense
Total Revenues
-
$ 22,000
24,500
11,100
53,400
84,400
139,000
NICE BITE, Incorporated
Income Statement
At December 31, 2021
Interest Expense
Office Expense
Salaries and Wages Expense
Utilities Expense
$
$
139,800
35,800
175,600
29,600
14,400
35,800
25,200
105,000
35,800](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F341730a3-5e00-4345-bbba-fd7509aae855%2Fcce08ae6-8fcd-4c8e-963b-7467dd533dfe%2Fb2be3r7_processed.jpeg&w=3840&q=75)
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