Blooming Flower Company was started in Year 1 when it acquired $60,900 cash from the issue of common stock. The following data summarize the company's first three years' operating activities. Assume that all transactions were cash transactions. Purchases of inventory Sales Cost of goods sold Selling and administrative expenses Income Statements. Balance Sheets Assets Cash Required Prepare an income statement (use multistep format) and balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in the accounting equation before preparing the statements for that year.) Complete this question by entering your answers in the tabs below. Merchandise inventory Total assets Liabilities Stockholders' equity Common stock Retained earnings Year 1 $23,800 26,900 12,500 5,310 BLOOMING FLOWER COMPANY Balance Sheets As of Year Ended December 31 Year 1 Total stockholders' equity Total liabilities and stockholders' equity Prepare a balance sheet for each fiscal year. (Hint: Record the transaction data for each accounting period in the accounting equation before preparing the statements for that year.) Answer is complete but not entirely correct. $ 69,990 ✔ 60,900 9,090 Year 2 Year 2 $11,200 30,200 17,600 8,100 $58,690$ 69,590 $ 78,840 X ✔ 11,300 4,900✔ 5,100 $74,490 60,900✔ 13,590 69,990 74,490 $ 69,990 $ 74,490 Year 3 Year 3 $19,500 37,700 19,300 9,150 $ 83,940 60,900 22,840 83,740 $ 83,740
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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