Directions: Prepare a schedule of cost of goods sold for the three-month period and a statement of income for the period ended March 31, 2020. Prepare also a closing entry with the given data below. Write your answer on the space provided. III. andising (owned
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.
![B. Statement of Income
Readilly](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38ed4d83-c7a8-497c-9923-f11529a374d8%2F4211243c-53f5-46cd-bfff-ebc5d8990f34%2Fylkr3hb_processed.jpeg&w=3840&q=75)
![Directions: Prepare a schedule of cost of goods sold for the three-month
period and a statement of income for the period ended March 31, 2020.
Prepare also a closing entry with the given data below. Write your answer
on the space provided.
II.
Below are some of the accounts relating to the income of Ken Merchandising (owWned
by Thara Ken) for the one month period ended March 31, 2020:
Sales
170,100
500,000 Merchandise Inventory,
beginning
Sales Returns and
165,000
15,000 Merchandise Inventory,
Ending
Allowances
Sales Discounts
7,800 Purchase Discounts
1,800
Purchases
302,000 Freight-In
5,000
Purchase Returns and
4,9000 Rental Expense
5,000
Allowances
Supplies Expense
1,200 Delivery Expense
2,100
Salaries Expense
18,000 Utilities Expense
8,000
A. Cost of Goods Sold](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F38ed4d83-c7a8-497c-9923-f11529a374d8%2F4211243c-53f5-46cd-bfff-ebc5d8990f34%2Fymp5hq5_processed.jpeg&w=3840&q=75)
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