Edwards Corporation operates hair salons under various brand names. The following is a simplified list of accounts and amounts (in millions) reported in the company's accounts for the year ended June 30, 2019. Accounts Payable Accounts Receivable Accumulated Amortization Accumulated Depreciation Amortization Expense Cash Common Stock Depreciation Expense Equipment Income Tax Expense Interest Expense Notes Payable (long-term) Office Expense Prepaid Rent Rent Expense Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Service Revenue Software Supplies Supplies Expense $ 120 66 56 346 3 106 166 71 494 2 1 266 224 69 308 316 489 117 1,106 381 113 166
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.
![Edwards Corporation operates hair salons under various brand names. The following is a simplified list of accounts
and amounts (in millions) reported in the company's accounts for the year ended June 30, 2019.
Accounts Payable
Accounts Receivable
Accumulated Amortization.
Accumulated Depreciation
Amortization Expense
Cash
Common Stock
Depreciation Expense
Equipment
Income Tax Expense
Interest Expense
Notes Payable (long-term).
Office Expense
Prepaid Rent
Rent Expense
Retained Earnings
Salaries and Wages Expense
Salaries and Wages Payable.
Service Revenue
Software
Supplies
Supplies Expense
Account Titles
Cash
Accounts Receivable
Supplies
Prepaid Rent
EDWARDS CORPORATION
Post-Closing Trial Balance
(in millions)
Equipment
Accumulated Depreciation
Software
Accumulated Amortization
Accounts Payable
Salaries and Wages Payable
Notes Payable (long-term)
Common Stock
Retained Earnings
Service Revenue
Salaries and Wages Expense
Rent Expense
Office Expense
Supplies Expense
Depreciation Expense
Interest Expense
3. Prepare a post-closing trial balance at June 30, 2019. (Enter your answers in millions (i.e., 10,000,000 should be enterea as 10).
Amortization Expense
Income Tax Expense
Totals
$ 120
66
56
346
3
106
166
Debit
71
494
2
1
266
224
69
308
316
489
117
1,106
381
113
166
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