Compute the consignment income to be reported by the consignor
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.
Compute the consignment income to be reported by the consignor
![DEF Company consigned 1,000 video players costing P900 per unit and retailing for P1,500 per unit to UUU on November
1, 2021. DEF paid P15,000 for the freight. For the month of November, the consignee sold 700 units. On December DEF
ordered safety device on players which have not been sold. The cost of this alteration was: parts from inventories, P6,000
with a freight of P5,000. On December 20, DEF Company sent a mechanic to UUU to install safety devices on players. The
cost of for labor, P5,000 which was paid by the consignee. DEF Company, thereafter, increased the unit retail price to
P1,750 for the unsold players. On December 31, UUU remitted P1,021,750 to DEF Company in full settlement to date
after deducting a commission of 15% of selling price on each player sold and P14,500 for delivering the players sold.
Compute the consignment income to be reported by the consignor](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F73d299a0-37fa-4a65-b0eb-100bc6d9b4c5%2F2a6fbf24-9f0e-4494-8ac1-cd56b388efdb%2Fy5tdwx_processed.png&w=3840&q=75)
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