Instructions General Jourmal Shaded cells have feedback Fava Company began operations in 2018 and used the LIFO inventory method for both financial reporting and income taxes. At the beginning of 2019, the anticipated cost trends 1. Prepare the journal entry to refiect the change on January 1, 2019. in the industry had changed, so that it adopted the FIFO method for both financial reporting and income taxes. Fava reported revenues of $300.000 and $270.000 in 2019 and 2018, respectively. Fava reported expenses (excluding income tax expense) of $125,000 and $120,000 in 2019 and 2018, which included cost of goods sold of $55,000 and $45,000, respectively. An analysis indicates that the FIFO cost of goods s d would have been lower by $8,000 in 2018. The tax rate is 21%. Fava has a simple capital structure General Journal Instructions with 15,000 shares of common stock outstanding during 2018 and 2019. It paid no dividends in either year. Required: How does grading work? 1. Prepare the journal entry to reflect the change. PAGE 1 2. At the end of 2019. prepare comparative income statements for 2019 and 2018. Notes to the financial statements are not necessary. GENERAL JOURNAL Score: 25/37 3. At the end of 2019, prepare the comparative retained earnings statements for 2019 and 2018. DATE ACCOUNT TITLE POST. RET. DEBIT CREDIT Inventory 8,00000 Retained Earnings 5,600.00 Deferred Tax Asset 2,400.00 K Points: 4.73/7 Retained Earnings Shaded cells have feedback Feedback 3. At the end of 2019. prepare the comparative retained earnings statements for 2019 and 2018. v Check My Work Adjust the book values of the assets and liabilities (including income taxes) that are affected by the change so that thein
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
