Prepare a classified balance sheet for Jackson Corporation at December 31, 2021, by properly classifying each of the accounts. E 3–6 Balance sheet; Current versus long-term classification (LO3–2, LO3–3) Presented next are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021. Account Title Debits Credits Cash $20,000 Accounts receivable 130,000 Raw materials 24,000 Notes receivable 100,000 Interest receivable 3,000 Interest payable $5,000 Investment in debt securities 32,000 Land 50,000 Buildings 1,300,000 Accumulated depreciation—buildings 620,000 Work in process 42,000 Finished goods 89,000 Equipment 300,000 Accumulated depreciation—equipment 130,000 Patent (net) 120,000 Prepaid rent (for the next two years) 60,000 Deferred revenue 36,000 Accounts payable 180,000 Notes payable 400,000 Restricted cash (for payment of notes payable) 80,000 Allowance for uncollectible accounts 13,000 Sales revenue 800,000 Cost of goods sold 450,000 Rent expense 28,000 Additional Information: The notes receivable, along with any accrued interest, are due on November 22, 2022. The notes payable are due in 2025. Interest is payable annually. The investment in debt securities consist of treasury bills, all of which mature next year. Deferred revenue will be recognized as revenue equally over the next two years.
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.
Prepare a classified
E 3–6 Balance sheet; Current versus long-term classification (LO3–2, LO3–3)
Presented next are the ending balances of accounts for the Kansas Instruments Corporation at December 31, 2021.
|
Account Title |
Debits |
Credits |
|
Cash |
$20,000 |
|
|
|
130,000 |
|
|
Raw materials |
24,000 |
|
|
Notes receivable |
100,000 |
|
|
Interest receivable |
3,000 |
|
|
Interest payable |
$5,000 |
|
|
Investment in debt securities |
32,000 |
|
|
Land |
50,000 |
|
|
Buildings |
1,300,000 |
|
|
|
620,000 |
|
|
Work in process |
42,000 |
|
|
Finished goods |
89,000 |
|
|
Equipment |
300,000 |
|
|
Accumulated depreciation—equipment |
130,000 |
|
|
Patent (net) |
120,000 |
|
|
Prepaid rent (for the next two years) |
60,000 |
|
|
Deferred revenue |
36,000 |
|
|
Accounts payable |
180,000 |
|
|
Notes payable |
400,000 |
|
|
Restricted cash (for payment of notes payable) |
80,000 |
|
|
Allowance for uncollectible accounts |
13,000 |
|
|
Sales revenue |
800,000 |
|
|
Cost of goods sold |
450,000 |
|
|
Rent expense |
28,000 |
Additional Information:
- The notes receivable, along with any accrued interest, are due on November 22, 2022.
- The notes payable are due in 2025. Interest is payable annually.
- The investment in debt securities consist of treasury bills, all of which mature next year.
- Deferred revenue will be recognized as revenue equally over the next two years.
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