PR 4-1A: Beacon Signals Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Beacon Signals Company prepared the following end-of-period spreadsheet December 31, 2019, the end of the fiscal year: at 6. B | C | D |E| Beacon Signals Company End-of-Period Spreadsheet For the Year Ended December 31, 2019 2 Unadjusted Trial Balance Adjusted Trial Balance 4 5 Adjustments 6 Account Title Dr. Cr. Dr. Cr. Dr. Cr. 7 13,000 40,500 4,200 3,000 98,000 500,000 8 Cash 9 Accounts Receivable 10 Prepaid Insurance 11 Supplies 12 Land 13 Building 14 Accum. Depr.–Building 15 Equipment 16 Accum. Depr.-Equipment 17 Accounts Payable 18 Salaries and Wages Payable 19 Unearned Rent 20 Sarah Colin, Capital 21 Sarah Colin, Drawing 22 Fees Earned 23 Rent Revenue 13,000 53,000 1,200 (a) 12,500 (b) 3,000 (c) 2,250 750 98,000 500,000 255,300 (d) 9,000 264,300 121,900 121,900 100,100 15,700 104,600 15,700 4,900 800 (e) 4,500 () 4,900 2,100 (g) 1,300 238, 100 238,100 10,000 10,000 (a)12,500 (g) 1,300 388,700 401,200 1,300 24 Salaries and Wages Expense 25 Advertising Expense 26 Utilities Expense 27 Depr. Exp.–Building 28 Repairs Expense 29 Depr. Exp.–Equipment 30 Insurance Expense 31 Supplies Expense 32 Misc. Expense 33 34 (1) 4,900 168,000 21,700 11,400 9,000 8,850 4,500 3,000 2,250 4,350 37,450 1,030,900 1,030,900 163,100 21,700 11,400 (d) 9,000 8,850 (e) 4,500 (b) 3,000 |(c) 2,250 4,350 1,000,000 1,000,000 37,450 Required: 1. Prepare an income statement for the year ended December 31. 2. Prepare a statement of owner's equity for the year ended December 31. No additional investments were made during the year. 3. Prepare a balance sheet as of December 31.
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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