Presented below are selected accounts of Flint Company at December 31, 2020. Inventory (finished goods) $ 53,500 Cost of Goods Sold $2,192,400 Unearned Service Revenue 95,200 Notes Receivable 41,000 Equipment 257,100 Accounts Receivable 161,020 Inventory (work in process) 36,000 Inventory (raw materials) 182,280 Cash 43,800 Supplies Expense 65,490 Debt Investments (trading) 39,500 Allowance for Doubtful Accounts 11,290 Customer Advances 53,200 Licenses 16,890 Restricted Cash for Plant Expansion 58,300 Additional Paid-in Capital 88,040 Treasury Stock 22,320 The following additional information is available. 1. Inventories are valued at lower-of-cost-or-market using LIFO. 2. Equipment is recorded at cost. Accumulated depreciation, computed on a straight-line basis, is $47,568. 3. The short-term investments have a fair value of $29,730. 4. The notes receivable are due April 30, 2022, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2020.) 5. The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $54,800 are pledged as collateral on a bank loan. 6. Licenses are recorded net of accumulated amortization of $14,510. 7. Treasury stock is recorded at cost. Prepare the current assets section of FlintCompany’s December 31, 2020, balance sheet, with appropriate disclosures. (List Current Assets in order of liquidity. Enter account name only and do not provide the descriptive information provided in the question.)
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.
Presented below are selected accounts of Flint Company at December 31, 2020.
| Inventory (finished goods) | $ 53,500 | Cost of Goods Sold | $2,192,400 | |||
| Unearned Service Revenue | 95,200 | Notes Receivable | 41,000 | |||
| Equipment | 257,100 | 161,020 | ||||
| Inventory (work in process) | 36,000 | Inventory (raw materials) | 182,280 | |||
| Cash | 43,800 | Supplies Expense | 65,490 | |||
| Debt Investments (trading) | 39,500 | Allowance for Doubtful Accounts | 11,290 | |||
| Customer Advances | 53,200 | Licenses | 16,890 | |||
| Restricted Cash for Plant Expansion | 58,300 | Additional Paid-in Capital | 88,040 | |||
| 22,320 |
The following additional information is available.
| 1. | Inventories are valued at lower-of-cost-or-market using LIFO. | |
| 2. | Equipment is recorded at cost. |
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| 3. | The short-term investments have a fair value of $29,730. | |
| 4. | The notes receivable are due April 30, 2022, with interest receivable every April 30. The notes bear interest at 6%. (Hint: Accrue interest due on December 31, 2020.) | |
| 5. | The allowance for doubtful accounts applies to the accounts receivable. Accounts receivable of $54,800 are pledged as collateral on a bank loan. | |
| 6. | Licenses are recorded net of accumulated amortization of $14,510. | |
| 7. | Treasury stock is recorded at cost. |
Prepare the current assets section of FlintCompany’s December 31, 2020,
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FLINT COMPANY
Balance Sheet (Partial) |
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