On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account balances: Accounts Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Accounts Payable Common Stock, $1 par value Additional Paid-in Capital Retained Earnings Totals Debit $ 44,400 47,900 9,200 81,000 Credit $ 10,700 16,300 17,000 97,000 41,500 $182,500 $182,500 During January 2021, the following transactions occur: January 2 Issue an additional 2,100 shares of $1 par value common stock for $42,000. January 9 Provide services to customers on account, $19,300. January 10 Purchase additional supplies on account, $6,600. January 12 Purchase 1,200 shares of treasury stock for $20 per share. January 15 Pay cash on accounts payable, $18,200. January 21 Provide services to customers for cash, $50,800. January 22 Receive cash on accounts receivable, $18,300. January 29 Declare a cash dividend of $0.20 per share to all shares outstanding on January 29. The dividend is payable on February 15. (Hint: Grand Finale Fireworks had 17,000 shares outstanding on January 1, 2021, and dividends are not paid on treasury stock.) January 30 Resell 500 shares of treasury stock for $22 per share. January 31 Pay cash for salaries during January, $43,700.
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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Exercise 10-17 Complete the accounting cycle using stockholders' equity transactions
(LO10-2, 10-4, 10-5, 10-8)
[The following information applies to the questions displayed below.]
On January 1, 2021, the general ledger of Grand Finale Fireworks includes the following account
balances:
Accounts
Cash
Accounts Receivable
Supplies
Equipment
Accumulated Depreciation
Accounts Payable
Common Stock, $1 par value
Additional Paid-in Capital
Retained Earnings
Totals
Debit
$44,400
47,900
9,200
81,000
Credit
$ 10,700
16,300
17,000
97,000
41,500
$182,500 $182,500
During January 2021, the following transactions occur:
January 2 Issue an additional 2,100 shares of $1 par value common stock for $42,000.
January 9 Provide services to customers on account, $19,300.
Exercise 10-17 Part 1
January 10 Purchase additional supplies on account, $6,600.
January 12 Purchase 1,200 shares of treasury stock for $20 per share.
January 15 Pay cash on accounts payable, $18,200.
January 21 Provide services to customers for cash, $50,800.
January 22 Receive cash on accounts receivable, $18,300.
January 29 Declare a cash dividend of $0.20 per share to all shares outstanding on January 29. The
dividend is payable on February 15. (Hint: Grand Finale Fireworks had 17,000 shares
outstanding on January 1, 2021, and dividends are not paid on treasury stock.)
January 30 Resell 500 shares of treasury stock for $22 per share.
January 31 Pay cash for salaries during January, $43,700.
1. Record each of the transactions listed above. (If no entry is required for a transaction/event, select "No journal entry
required" in the first account field.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc7fe5a73-45e4-4166-8ba1-50e355550dfc%2F0612d280-b62e-4ddf-9249-9c76698ee60e%2Ff6ylk21i_processed.jpeg&w=3840&q=75)
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