Income Statement, Statement of Owner's Equity and Balance Sheet Instructions Amount Descriptions Income Statement Statement of Owner’s Equity Balance Sheet Instructions Backlund Farm Supply completed the Adjusted Trial Balance for the year ended December 31, 20--. Owner’s equity as of January 1, 20--, was $507,752. The current portion of Note Payable is $3,000. Backlund Farm Supply End-of-Period Spreadsheet (Partial) December 31, 20-- 1 ACCOUNT TITLE ADJUSTED TRIAL BALANCE DEBIT ADJUSTED TRIAL BALANCE CREDIT 2 Cash 25,784.00 3 Accounts Receivable 10,296.00 4 Merchandise Inventory 71,280.00 5 Estimated Returns Inventory 1,320.00 6 Supplies 2,640.00 7 Prepaid Insurance 1,980.00 8 Land 99,000.00 9 Building 385,000.00 10 Accumulated Depreciation-Building 22,000.00 11 Store Equipment 132,000.00 12 Accumulated Depreciation-Store Equipment 3,960.00 13 Accounts Payable 10,516.00 14 Customer Refunds Payable 1,760.00 15 Wages Payable 1,320.00 16 Sales Tax Payable 3,784.00 17 Note Payable 17,600.00 18 J. Buckland, Capital 587,752.00 19 J. Buckland, Drawing 5,280.00 20 Income Summary 65,120.00 71,280.00 21 880.00 1,320.00 22 Sales 358,644.00 23 Sales Returns and Allowances 5,896.00 24 Purchases 178,904.00 25 Purchases Returns and Allowances 4,488.00 26 Purchases Discounts 3,520.00 27 Freight-In 1,760.00 28 Wages Expense 76,340.00 29 Advertising Expense 1,320.00 30 Supplies Expense 880.00 31 Phone Expense 3,010.00 32 Utilities Expense 3,150.00 33 Insurance Expense 1,760.00 34 Depreciation Expense-Building 11,000.00 35 Depreciation Expense-Store Equipment 1,980.00 36 Miscellaneous Expense 660.00 37 Interest Expense 704.00 38 $1,087,944.00 $1,087,944.00 39 353,364.00 439,252.00 40 Net Income $85,888.00 Required: 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner’s equity. 3. Prepare a balance sheet. Amount Descriptions Amount Descriptions additional investments Cost of goods purchased Cost of goods sold current portion Decrease in capital Goods available for sale Gross profit Income from operations Increase in capital J. Backlund, capital J. Backlund, capital, December 31, 20-- J. Backlund, capital, January 1, 20-- Merchandise inventory, December 31, 20-- Merchandise inventory, January 1, 20-- Net income Net loss Net purchases Net sales Total assets Total current assets Total current liabilities Total investment Total liabilities Total liabilities and owner’s equity Total operating expenses withdrawals for the year Income Statement 1. Prepare a multiple-step income statement. Income Statement Instructions Backlund Farm Supply Income Statement For Year Ended December 31, 20-- 1 Revenue from sales: 2 3 4 5 Cost of goods sold: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Operating expenses: 20 21 22 23 24 25 26 27 28 29 30 31 Other expenses: 32 33 Statement of Owner’s Equity 2. Prepare a statement of owner’s equity. Statement of Owner’s Equity Instructions Backlund Farm Supply Statement of Owner’s Equity For Year Ended December 31, 20-- 1 2 3 4 5 6 7 Balance Sheet 3. Prepare a balance sheet. Additional Instructions Backlund Farm Supply Balance Sheet December 31, 20-- 1 Assets 2 Current assets: 3 4 5 6 7 8 9 10 Property, plant, and equipment: 11 12 13 14 15 16 17 Liabilities 18 Current liabilities: 19 20 21 22 23 24 25 Long-term liabilities: 26 27 28 29 Owner’s equity 30 31
Income Statement, Statement of Owner's Equity and Balance Sheet Instructions Amount Descriptions Income Statement Statement of Owner’s Equity Balance Sheet Instructions Backlund Farm Supply completed the Adjusted Trial Balance for the year ended December 31, 20--. Owner’s equity as of January 1, 20--, was $507,752. The current portion of Note Payable is $3,000. Backlund Farm Supply End-of-Period Spreadsheet (Partial) December 31, 20-- 1 ACCOUNT TITLE ADJUSTED TRIAL BALANCE DEBIT ADJUSTED TRIAL BALANCE CREDIT 2 Cash 25,784.00 3 Accounts Receivable 10,296.00 4 Merchandise Inventory 71,280.00 5 Estimated Returns Inventory 1,320.00 6 Supplies 2,640.00 7 Prepaid Insurance 1,980.00 8 Land 99,000.00 9 Building 385,000.00 10 Accumulated Depreciation-Building 22,000.00 11 Store Equipment 132,000.00 12 Accumulated Depreciation-Store Equipment 3,960.00 13 Accounts Payable 10,516.00 14 Customer Refunds Payable 1,760.00 15 Wages Payable 1,320.00 16 Sales Tax Payable 3,784.00 17 Note Payable 17,600.00 18 J. Buckland, Capital 587,752.00 19 J. Buckland, Drawing 5,280.00 20 Income Summary 65,120.00 71,280.00 21 880.00 1,320.00 22 Sales 358,644.00 23 Sales Returns and Allowances 5,896.00 24 Purchases 178,904.00 25 Purchases Returns and Allowances 4,488.00 26 Purchases Discounts 3,520.00 27 Freight-In 1,760.00 28 Wages Expense 76,340.00 29 Advertising Expense 1,320.00 30 Supplies Expense 880.00 31 Phone Expense 3,010.00 32 Utilities Expense 3,150.00 33 Insurance Expense 1,760.00 34 Depreciation Expense-Building 11,000.00 35 Depreciation Expense-Store Equipment 1,980.00 36 Miscellaneous Expense 660.00 37 Interest Expense 704.00 38 $1,087,944.00 $1,087,944.00 39 353,364.00 439,252.00 40 Net Income $85,888.00 Required: 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner’s equity. 3. Prepare a balance sheet. Amount Descriptions Amount Descriptions additional investments Cost of goods purchased Cost of goods sold current portion Decrease in capital Goods available for sale Gross profit Income from operations Increase in capital J. Backlund, capital J. Backlund, capital, December 31, 20-- J. Backlund, capital, January 1, 20-- Merchandise inventory, December 31, 20-- Merchandise inventory, January 1, 20-- Net income Net loss Net purchases Net sales Total assets Total current assets Total current liabilities Total investment Total liabilities Total liabilities and owner’s equity Total operating expenses withdrawals for the year Income Statement 1. Prepare a multiple-step income statement. Income Statement Instructions Backlund Farm Supply Income Statement For Year Ended December 31, 20-- 1 Revenue from sales: 2 3 4 5 Cost of goods sold: 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Operating expenses: 20 21 22 23 24 25 26 27 28 29 30 31 Other expenses: 32 33 Statement of Owner’s Equity 2. Prepare a statement of owner’s equity. Statement of Owner’s Equity Instructions Backlund Farm Supply Statement of Owner’s Equity For Year Ended December 31, 20-- 1 2 3 4 5 6 7 Balance Sheet 3. Prepare a balance sheet. Additional Instructions Backlund Farm Supply Balance Sheet December 31, 20-- 1 Assets 2 Current assets: 3 4 5 6 7 8 9 10 Property, plant, and equipment: 11 12 13 14 15 16 17 Liabilities 18 Current liabilities: 19 20 21 22 23 24 25 Long-term liabilities: 26 27 28 29 Owner’s equity 30 31
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
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.
Topic Video
Question
Income Statement, Statement of Owner's Equity and Balance Sheet
Instructions
Amount Descriptions
Income Statement
Statement of Owner’s Equity
Balance Sheet
Instructions
Backlund Farm Supply completed the Adjusted Trial Balance for the year ended December 31, 20--. Owner’s equity as of January 1, 20--, was $507,752. The current portion of Note Payable is $3,000.
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Backlund Farm Supply
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End-of-Period Spreadsheet (Partial)
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December 31, 20--
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1
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ACCOUNT TITLE
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ADJUSTED TRIAL BALANCE DEBIT
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ADJUSTED TRIAL BALANCE CREDIT
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2
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Cash
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25,784.00
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3
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10,296.00
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4
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Merchandise Inventory
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71,280.00
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5
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Estimated Returns Inventory
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1,320.00
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6
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Supplies
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2,640.00
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7
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Prepaid Insurance
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1,980.00
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8
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Land
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99,000.00
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9
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Building
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385,000.00
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10
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22,000.00
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11
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Store Equipment
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132,000.00
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12
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Accumulated Depreciation-Store Equipment
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3,960.00
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13
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Accounts Payable
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10,516.00
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14
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Customer Refunds Payable
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1,760.00
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15
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Wages Payable
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1,320.00
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16
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Sales Tax Payable
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3,784.00
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17
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Note Payable
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17,600.00
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18
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J. Buckland, Capital
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587,752.00
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19
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J. Buckland, Drawing
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5,280.00
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20
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Income Summary
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65,120.00
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71,280.00
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21
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880.00
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1,320.00
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22
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Sales
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358,644.00
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23
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Sales Returns and Allowances
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5,896.00
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24
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Purchases
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178,904.00
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25
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Purchases Returns and Allowances
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4,488.00
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26
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Purchases Discounts
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3,520.00
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27
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Freight-In
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1,760.00
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28
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Wages Expense
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76,340.00
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29
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Advertising Expense
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1,320.00
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30
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Supplies Expense
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880.00
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31
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Phone Expense
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3,010.00
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32
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Utilities Expense
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3,150.00
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33
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Insurance Expense
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1,760.00
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34
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Depreciation Expense-Building
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11,000.00
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35
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Depreciation Expense-Store Equipment
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1,980.00
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36
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Miscellaneous Expense
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660.00
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37
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Interest Expense
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704.00
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38
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$1,087,944.00
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$1,087,944.00
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39
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353,364.00
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439,252.00
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40
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Net Income
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$85,888.00
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Required:
| 1. | Prepare a multiple-step income statement. |
| 2. | Prepare a statement of owner’s equity. |
| 3. | Prepare a balance sheet. |
Amount Descriptions
| Amount Descriptions | |
| additional investments | |
| Cost of goods purchased | |
| Cost of goods sold | |
| current portion | |
| Decrease in capital | |
| Goods available for sale | |
| Gross profit | |
| Income from operations | |
| Increase in capital | |
| J. Backlund, capital | |
| J. Backlund, capital, December 31, 20-- | |
| J. Backlund, capital, January 1, 20-- | |
| Merchandise inventory, December 31, 20-- | |
| Merchandise inventory, January 1, 20-- | |
| Net income | |
| Net loss | |
| Net purchases | |
| Net sales | |
| Total assets | |
| Total current assets | |
| Total current liabilities | |
| Total investment | |
| Total liabilities | |
| Total liabilities and owner’s equity | |
| Total operating expenses | |
| withdrawals for the year |
Income Statement
1. Prepare a multiple-step income statement.
Income Statement Instructions
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Backlund Farm Supply
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Income Statement
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For Year Ended December 31, 20--
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1
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Revenue from sales:
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2
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3
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4
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5
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Cost of goods sold:
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6
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7
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8
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9
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10
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11
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12
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13
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14
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15
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16
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17
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18
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19
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Operating expenses:
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20
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21
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22
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25
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26
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27
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28
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29
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30
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31
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Other expenses:
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32
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33
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Statement of Owner’s Equity
2. Prepare a statement of owner’s equity.
Statement of Owner’s Equity Instructions
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Backlund Farm Supply
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Statement of Owner’s Equity
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For Year Ended December 31, 20--
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1
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2
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3
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5
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7
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Balance Sheet
3. Prepare a balance sheet.
Additional Instructions
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Backlund Farm Supply
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Balance Sheet
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December 31, 20--
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1
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Assets
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2
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Current assets:
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3
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9
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10
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Property, plant, and equipment:
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11
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12
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13
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14
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15
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16
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17
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Liabilities
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18
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Current liabilities:
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19
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20
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21
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Long-term liabilities:
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26
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27
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28
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Owner’s equity
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30
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31
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