haroah Inc. is a private company reporting under ASPE. The following selected account balances were reported in Pharoah Inc.'s nancial statements at year end: Cash Building Equipment Land Accumulated depreciation-building Accumulated depreciation-equipment Dividends payable Mortgage payable Notes payable Common shares: 46,000 shares in 2024; 40,000 in 2023 Retained earnings Cash dividends declared Depreciation expense-buildings Depreciation expense-equipment Gain on sale of equipment Loss on sale of building Interest expense Additional information: 4. 5. 6. (a) 2024 Your answer is partially correct. $19.910 $9,000 765,000 675,000 353,700 306,000 90,000 276,750 111,600 5,625 490,500 306,000 726,300 180,000 22,500 22,500 44,215 900 2023 9,000 43,425 54,000 270,000 84,600 2,250 526,500 279,000 616,500 90,000 9,000 38,250 1. Purchased $67,500 of equipment for $9,000 cash and a note payable for the remainder. 2. Equipment was also sold during the year. 3. Sold a building that originally cost $45,000. Used cash to purchase land and a building. Mortgage payments and notes payable payments included interest and principal amounts. Common shares were issued for cash. 24,300 0 0 40,275 etermine the amount of any cash inflows or outflows related to investing activities in 2024. (Hint: Use T accounts to calculate th
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.
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