Finley Company End-of-Period Spreadsheet For the Year Ended December 31 Adjusted Trial Balance Income Statement Balance Sheet Account Title Debit Credit Debit Credit Debit Credit Cash 16,000 16,000 Accounts Receivable 6,000 6,000 Supplies 2,000 2,000 Equipment 19,000 19,000 Accumulated Depr. 6,000 6,000 Accounts Payable 10,000 10,000 Wages Payable 2,000 2,000 Common Stock 5,000 5,000 Retained Earnings 11,545 11,545 Dividends 1,000 1,000 Fees Earned 41,258 41,258 Wages Expense 21,776 21,776 Rent Expense 5,957 5,957 Depreciation Expense 4,070 4,070 Totals 75,803 75,803 31,803 41,258 44,000 34,545 Net Income (Loss) 9,455 9,455 41,258 41,258 44,000 44,000 The journal entry to close revenues and expenses would involve: a.debits to Fees Earned and Retained Earnings and credits to the expense accounts b.a debit to Fees Earned and credits to the expense accounts and Retained Earnings c.debits to the expense accounts and Retained Earnings and a credit to Fees Earned d.debits to the expense accounts and credits to Retained Earnings and Fees Earned
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.
| Finley Company End-of-Period Spreadsheet For the Year Ended December 31 |
||||||
| Adjusted |
Income Statement | |||||
| Account Title | Debit | Credit | Debit | Credit | Debit | Credit |
| Cash | 16,000 | 16,000 | ||||
| 6,000 | 6,000 | |||||
| Supplies | 2,000 | 2,000 | ||||
| Equipment | 19,000 | 19,000 | ||||
| Accumulated Depr. | 6,000 | 6,000 | ||||
| Accounts Payable | 10,000 | 10,000 | ||||
| Wages Payable | 2,000 | 2,000 | ||||
| Common Stock | 5,000 | 5,000 | ||||
| 11,545 | 11,545 | |||||
| Dividends | 1,000 | 1,000 | ||||
| Fees Earned | 41,258 | 41,258 | ||||
| Wages Expense | 21,776 | 21,776 | ||||
| Rent Expense | 5,957 | 5,957 | ||||
| 4,070 | 4,070 | |||||
| Totals | 75,803 | 75,803 | 31,803 | 41,258 | 44,000 | 34,545 |
| Net Income (Loss) | 9,455 | 9,455 | ||||
| 41,258 | 41,258 | 44,000 | 44,000 |
The
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
