Bridgeport Corp.’s balance sheet at December 31, 2019, is presented below. BRIDGEPORT CORP. Balance Sheet December 31, 2019 Cash $27,000 Accounts payable $26,500 Accounts receivable 45,000 Common stock ($10 par) 80,000 Allowance for doubtful accounts (1,700 ) Retained earnings 123,700 Supplies 4,400 Land 40,500 Buildings 138,000 Accumulated depreciation—buildings (23,000 ) $230,200 $230,200 During 2020, the following transactions occurred. 1. On January 1, 2020, Bridgeport issued 1,400 shares of $43 par, 7% preferred stock for $63,000. 2. On January 1, 2020, Bridgeport also issued 840 shares of the $10 par value common stock for $24,000. 3. Bridgeport performed services for $333,000 on account. 4. On April 1, 2020, Bridgeport collected fees of $37,000 in advance for services to be performed from April 1, 2020, to March 31, 2021. 5. Bridgeport collected $279,000 from customers on account. 6. Bridgeport bought $36,000 of supplies on account. 7. Bridgeport paid $31,500 on accounts payable. 8. Bridgeport reacquired 430 shares of its common stock on June 1, 2020, for $27 per share. 9. Paid other operating expenses of $180,000. 10. On December 31, 2020, Bridgeport declared the annual preferred stock dividend and a $1.1 per share dividend on the outstanding common stock, all payable on January 15, 2021. 11. An account receivable of $2,000 which originated in 2019 is written off as uncollectible. Adjustment data: 1. A count of supplies indicates that $5,900 of supplies remain unused at year-end. 2. Recorded revenue from item 4 above. 3. The allowance for doubtful accounts should have a balance of $3,700 at year end. 4. Depreciation is recorded on the building on a straight-line basis based on a 30-year life and a salvage value of $12,000. 5. The income tax rate is 30%. (Hint: Prepare the income statement up to income before taxes and multiply by 30% to compute the amount.) (a) Prepare journal entries for the transactions listed above and adjusting entries. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.)
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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Bridgeport Corp.’s balance sheet at December 31, 2019, is presented below. BRIDGEPORT CORP. Balance Sheet December 31, 2019 Cash $27,000 Accounts payable $26,500 Accounts receivable 45,000 Common stock ($10 par) 80,000 Allowance for doubtful accounts (1,700 )
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