Custom Cupcakes, Inc. Adjusted Trial Balance For the Year Ended December 31, 2021 Cash Debit Credit Accounts Receivable $73,600 Allowance for Doubtful Accounts 66,300 Merchandise Inventory 19,700 Supplies Prepaid Insurance 000' 6,500 Land Office Equipment 0090 Accumulated Depreciation - Office Equipment 72,750 Patents 17,500 Trademarks Notes Payable (Current Portion) Accounts Payable 1,500 Unearned Rent Check Figures: Salaries Payable 28,700 Income from Operations: $170,600 000'9 166,000 Interest Payable Retained Earnings 12/31/21: $98,350 Notes Payable, Due 2026 Bonds Payable Total Assets: $531,050 000'00 Discount on Bonds Payable 000' Common Stock 000'0 Paid in capital in excess of par - Common Stock Treasury Stock Retained Earnings 1/1/21 0000 11,750 Dividends 0000 365,000 Sales 000'0 Sales Returns and Allowances 000s Cost of Goods Sold 56,500 Administration Expenses 41,500 Selling Expenses Bad Debt Expense 006' Depreciation Expense Interest Expense Loss on Sale of Equipment 0000 $ 913,200 $913,200 TOTAL 1.
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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