Demo Consulting is a consulting firm owned and operated by Jesse Flatt. The following end-of-period spreadsheet was prepared for the year ended August 31, 20Y9: During the year ended August 31, 20Y9, $15,000 of additional common stock was issued. Demo Consulting End-of-Period Spreadsheet For the Year Ended August 31, 20Y9 Unadjusted Adjusted Trial Balance Adjustments Trial Balance Account Title Dr. Cr. Dr. Cr. Dr. Cr. Cash 182,500 182,500 Accounts Receivable 234,500 234,500 Supplies 27,600 22,600 5,000 Land 775,000 775,000 Office Equipment 400,000 400,000 Accumulated Depreciation 60,200 11,800 72,000 Accounts Payable 41,500 41,500 Salaries Payable 13,500 13,500 Common Stock 100,000 100,000 Retained Earnings 810,000 810,000 Dividends 30,000 30,000 Fees Earned 1,480,000 1,480,000 Salary Expense 829,600 13,500 843,100 Supplies Expense 22,600 22,600 Depreciation Expense 11,800 11,800 Miscellaneous Expense 12,500 12,500 2,491,700 2,491,700 47,900 47,900 2,517,000 2,517,000 Based on the preceding spreadsheet, prepare an income statement for Demo Consulting. Demo Consulting Income Statement For the Year Ended August 31, 20Y9 $ Expenses: $ Total expenses $ Based on the preceding spreadsheet, prepare a statement of stockholders’ equity for Demo Consulting. If a net loss is incurred or dividends were paid, enter that amount as a negative number using a minus sign. If an amount box does not require an entry, leave it blank. Demo Consulting Statement of Stockholders’ Equity For the Year Ended August 31, 20Y9 Common Stock Retained Earnings Total $ $ $ $ $ $ Based on the preceding spreadsheet, prepare a balance sheet for Demo Consulting. Demo Consulting Balance Sheet August 31, 20Y9 Assets Current assets: $ Total current assets $ Property, plant, and equipment: $ $ Total property, plant, and equipment Total assets $ Liabilities Current liabilities: $ Total liabilities $ Stockholders' Equity $ Total stockholders' equity Total liabilities and stockholders' equity $
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.
Demo Consulting is a consulting firm owned and operated by Jesse Flatt. The following end-of-period spreadsheet was prepared for the year ended August 31, 20Y9:
During the year ended August 31, 20Y9, $15,000 of additional common stock was issued.
| Demo Consulting | ||||||||
| End-of-Period Spreadsheet | ||||||||
| For the Year Ended August 31, 20Y9 | ||||||||
| Unadjusted | Adjusted | |||||||
| Adjustments | Trial Balance | |||||||
| Account Title | Dr. | Cr. | Dr. | Cr. | Dr. | Cr. | ||
| Cash | 182,500 | 182,500 | ||||||
| 234,500 | 234,500 | |||||||
| Supplies | 27,600 | 22,600 | 5,000 | |||||
| Land | 775,000 | 775,000 | ||||||
| Office Equipment | 400,000 | 400,000 | ||||||
| 60,200 | 11,800 | 72,000 | ||||||
| Accounts Payable | 41,500 | 41,500 | ||||||
| Salaries Payable | 13,500 | 13,500 | ||||||
| Common Stock | 100,000 | 100,000 | ||||||
| 810,000 | 810,000 | |||||||
| Dividends | 30,000 | 30,000 | ||||||
| Fees Earned | 1,480,000 | 1,480,000 | ||||||
| Salary Expense | 829,600 | 13,500 | 843,100 | |||||
| Supplies Expense | 22,600 | 22,600 | ||||||
| Depreciation Expense | 11,800 | 11,800 | ||||||
| Miscellaneous Expense | 12,500 | 12,500 | ||||||
| 2,491,700 | 2,491,700 | 47,900 | 47,900 | 2,517,000 | 2,517,000 |
Based on the preceding spreadsheet, prepare an income statement for Demo Consulting.
| Demo Consulting | ||
| Income Statement | ||
| For the Year Ended August 31, 20Y9 | ||
| $ | ||
| Expenses: | ||
| $ | ||
| Total expenses | ||
| $ |
Based on the preceding spreadsheet, prepare a statement of
| Demo Consulting | |||
| Statement of Stockholders’ Equity | |||
| For the Year Ended August 31, 20Y9 | |||
| Common Stock | Retained Earnings | Total | |
| $ | $ | $ | |
| $ | $ | $ |
Based on the preceding spreadsheet, prepare a
| Demo Consulting | |||
| Balance Sheet | |||
| August 31, 20Y9 | |||
| Assets | |||
| Current assets: | |||
| $ | |||
| Total current assets | $ | ||
| Property, plant, and equipment: | |||
| $ | |||
| $ | |||
| Total property, plant, and equipment | |||
| Total assets | $ | ||
| Liabilities | |||
| Current liabilities: | |||
| $ | |||
| Total liabilities | $ | ||
| Stockholders' Equity | |||
| $ | |||
| Total stockholders' equity | |||
| Total liabilities and stockholders' equity | $ |
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