Accounting Equation Req A to H (Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before atter answer the questions.) (Enter any decreases to account balances with a minus sign. Not all cells require entry.) LEE INCORPORATED Effect of Events on the General Ledger Accounts Assets Liabilities Stockholders' Equity %3D Event Accounts Receivable Accounts Common Retained Cash Land Payable Stock Earnings 1. Sales on account 2. Collected accounts receivable %3D 3. Incurred expense %3D 4. Paid accounts payable +
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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In Year 1, Lee Incorporated billed its customers $57,700 for services performed. The company collected $41,900 of the amount billed.
Lee ingurred $38,000 of other operating expenses
from the issue of common stock. The company invested $15,000 cash in the purchase of land.
account. Lee paid $23,100 of the accounts payable. Lee acquired $33,000 cash
Required
(Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation
before attempting to answer the questions.) Use the preceding information to answer the following questions.
a. What amount of revenue will Lee report on the Year 1 income statement?
b. What amount of cash flow from revenue will be reported on the statement of cash flows?
c. What is the net income for the period?
d. What is the net cash flow from operating activities for the period?
f. What is the amount of net cash flow from investing activities?
g. What is the amount of net cash flow from financing activities?
h. What amounts of total assets, liabilities, and equity will be reported on the year-end balance sheet?
Complete this question by entering your answers in the tabs below.
Accounting
Equation
Req A to H
(Hint: Identify the six events described in the paragraph and record them in general ledger accounts under an accounting equation before attempting
answer the questions.) (Enter any decreases to account balances with a minus sign. Not all cells require entry.)
LEE INCORPORATED
Effect of Events on the General Ledger Accounts
Assets
Liabilities
Stockholders' Equity
+]
Event
Accounts
Receivable
Accounts
Pavable
Cash
Common
Stock
Land
Retained
Earninas
%3D
4.
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