On January 1, 2020, Ivanhoe Inc. had the following stockholders' equity balances. Common Stock (425,000 shares issued) $850,000 Paid-in Capital in Excess of Par-Common Stock 580,000 Common Stock Dividends Distributable 130,000 Retained Earnings 660,000 During 2020, the following transactions and events occurred. 1. Issued 65,000 shares of $2 par value common stock as a result of 15% stock dividend declared on December 15, 2021. 2. Issued 32,500 shares of common stock for cash at $4 per share. 3. Purchased 31,000 shares of common stock for the treasury at $5 per share. 4. Declared and paid a cash dividend of $113,000. 5. Sold 6,000 shares of treasury stock for cash at $5 per share. 6. Earned net income of $365,000. Prepare a stockholders' equity statement for the year. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
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.
On January 1, 2020, Ivanhoe Inc. had the following
| Common Stock (425,000 shares issued) | $850,000 |
| Paid-in Capital in Excess of Par-Common Stock | 580,000 |
| Common Stock Dividends Distributable | 130,000 |
| 660,000 |
During 2020, the following transactions and events occurred.
| 1. | Issued 65,000 shares of $2 par value common stock as a result of 15% stock dividend declared on December 15, 2021. | ||
| 2. | Issued 32,500 shares of common stock for cash at $4 per share. | ||
| 3. | Purchased 31,000 shares of common stock for the treasury at $5 per share. | ||
| 4. | Declared and paid a cash dividend of $113,000. | ||
| 5. | Sold 6,000 shares of |
||
| 6. | Earned net income of $365,000. |
Prepare a stockholders' equity statement for the year. (If an amount reduces the account balance then enter with negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
| Ivanhoe Inc. Stockholders' Equity Statement choose the accounting period December 31, 2020For the Year Ending December 31, 2020For the Month Ending December 31, 2020 |
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|---|---|---|---|---|---|---|---|---|---|---|---|
| Common Stock |
Paid-in Capital in Excess of Par - Common Stock |
Common Stock Dividends Distributable |
Treasury Stock |
Retained Earnings |
Total | ||||||
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Balances, Jan. 1
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$enter a dollar amount | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | $enter a dollar amount | $enter a total amount for this row | |||||
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Issued 65,000 share for stock dividend
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Issued 32,500 shares for cash
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Purchased 31,000 shares of treasury stock
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Declared cash dividend
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Sold 6,000 shares of treasury stock
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Net income for year
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enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a dollar amount | enter a total amount for this row | |||||
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Balances, Dec. 31
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$enter a total amount for this column | $enter a total amount for this column | $enter a total amount for this column | $enter a total amount for this column | $enter a total amount for this column | $enter a total amount for this row |
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