Dec. 31, 20Y4 Dec. 31, 20Y3 Assets $ 683,100 $ 661,920 Cash Accounts receivable (net) 914,400 992,640 Inventories 1,394,400 1,363,800 Investments 432,000 Land 960,000 Equipment.... Accumulated depreciation-equipment 1,224,000 984,000 (481,500) (368,400) Total assets $4,751,460 $4,008,900 Liabilities and Stockholders' Equity $ 966,600 79,200 Accounts payable .... Accrued expenses payable. Dividends payable..... Common stock, $5 par $1,080,000 67,800 91,200 100,800 130,000 30,000 Paid-in capital: Excess of issue price over par-common stock...... Retained earnings...... Total liabilities and stockholders' equity. 450,000 950,000 2,422,860 $4,751,460 2,391,900 $4,008,900 The income statement for the year ended December 31, 20¥4, is as follows: Sales ...... $4,512,000 Cost of merchandise sold Gross profit ...... Operating expenses: Depreciation expense Other operating expenses Total operating expenses 2,352,000 $2,160,000 $ 113,100 1,344,840 1,457,940 $ 702,060 Operating income.. Other income: Gain on sale of investments... 156,000 $ 858,060 Income before income tax Income tax expense 299,100 $ 558,960 Net income ...
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.
The comparative
Please see the attachment for details:
Additional data obtained from an examination of the accounts in the ledger for 20Y4 are as follows:
a. Equipment and land were acquired for cash.
b. There were no disposals of equipment during the year.
c. The investments were sold for $588,000 cash.
d. The common stock was issued for cash.
e. There was a $528,000 debit to
Instructions
Prepare a statement of
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