amara Sawyerr is a lawyer and incurred the following transactions last year. Sales Price Basis Purchased Sold Monto City Bonds* $ 10,000 $ 5,000 11/1/2015 5/2/2019 Cincis Preferred Stock 25,000 6,000 7/15/2010 1/12/2019 Tastee's Grand Ice Cream Stock 14,000 10,000 7/1/2018 4/20/2019 Bovell Common 2,000 10,000 2/12/2016 11/29/2019 SAP Stock 4,000 3,000 8/2/2007 5/2/2019 XYZ Common 6,000 9,000 5/30/2017 10/20/2019 Prior-Year ST Capital Loss Carryforward 5,500 Prior year LT Capital Loss Carryforward 5,000 *Purchased when originally issued by Monto City. What is the net short-term capital gain/loss reported on the 2019 Schedule D? What is the net long-term capital gain/loss reported on the 2019 Schedule D? What amount of capital gain is subject to the preferential capital gains rate? Hint: remember the netting process. Show your working!
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.
amara Sawyerr is a lawyer and incurred the following transactions last year.
|
|
Sales Price |
Basis |
Purchased |
Sold |
|
|||||
|
Monto City Bonds* |
$ |
10,000 |
$ |
5,000 |
11/1/2015 |
5/2/2019 |
||||
|
Cincis |
|
25,000 |
|
6,000 |
7/15/2010 |
1/12/2019 |
||||
|
Tastee's Grand Ice Cream Stock |
|
14,000 |
|
10,000 |
7/1/2018 |
4/20/2019 |
||||
|
Bovell Common |
|
2,000 |
|
10,000 |
2/12/2016 |
11/29/2019 |
||||
|
SAP Stock |
|
4,000 |
|
3,000 |
8/2/2007 |
5/2/2019 |
||||
|
XYZ Common |
|
6,000 |
|
9,000 |
5/30/2017 |
10/20/2019 |
||||
|
Prior-Year ST Capital Loss Carryforward |
|
5,500 |
|
|
|
|
||||
|
Prior year LT Capital Loss Carryforward |
|
5,000 |
|
|
|
|
||||
*Purchased when originally issued by Monto City.
What is the net short-term capital gain/loss reported on the 2019 Schedule D? What is the net long-term capital gain/loss reported on the 2019 Schedule D? What amount of capital gain is subject to the preferential
Hint: remember the netting process. Show your working!
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