Assume one year later (2019) the company KY Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s journal entries and statement of owner’s equity based on the following information which is grouped according to your fist name initial. The company’s charter authorizes 1,000,000 shares of common stock and 100,000 shares of preferred stock and the following are the transactions for consideration: KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues ___ () shares of common stock with $1.00 par value. The land has been appraised at a market value of ____ (refer to the table below 380,000 $1,500,000 The company sold ___refer to the table below) shares of common stock with $1 par value. 150,000 Issued ___ (please refer to table below) shares of $___ (please refer to table below) par value preferred stock. Shares were issued at par. 23,000 $16 Earned net income of $___ (please refer to table below and $940,000 Dividend declared and paid - $0.15 per share on common stock Dividend declared and paid - $5 per share on preferred stock Using the information above and as guided: Prepare the Journal entries and closing entries for the above transaction Prepare the owner’s equity section of the balance sheet based on the info above.
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.
. Assume one year later (2019) the company KY Jeweller’s Ltd has been formed and the owners are desirous of companying several financial transactions and possible outcomes to assist in guiding their decision-making process. They have asked each student from your accounting course to prepare the company’s
- KY Jewelers purchased a piece of land from the original owner. In payment for the land, KY Jewelers issues ___ () shares of common stock with $1.00 par value.
- The land has been appraised at a market value of ____ (refer to the table below
|
380,000 |
$1,500,000 |
- The company sold ___refer to the table below) shares of common stock with $1 par value.
|
|
150,000 |
|
|
|
- Issued ___ (please refer to table below) shares of $___ (please refer to table below) par value preferred stock. Shares were issued at par.
|
23,000 |
$16 |
- Earned net income of $___ (please refer to table below and
|
|
$940,000 |
- Dividend declared and paid - $0.15 per share on common stock
- Dividend declared and paid - $5 per share on preferred stock
Using the information above and as guided:
- Prepare the Journal entries and closing entries for the above transaction
- Prepare the owner’s equity section of the balance sheet based on the info above.
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