Required a. Organize the transaction data in accounts under the accounting equation for Year 2 and Year 3. (Enter any decreases to account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input - leave cells blank if there is no corresponding input needed.) DOYLE COMPANY Effect of Events on the Accounting Equation Year 2 and Year 3 Assets = Liabilities Stockholders" +] Equity Retained Earnings Accounts Titles for Retained Earnings Event Bonds Cash Land +] Payable Year 2 1/1 1/1 + + 12/31 + 12/31 +1 Bal. Year 3 Beg, bal. 12/31 12/31 End. bal.
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.
![[The following information applies to the questions displayed below.]
Doyle Company issued $500,000 of 10-year, 7 percent bonds on January 1, Year 2. The bonds were issued at face
value. Interest is payable in cash on December 31 of each year. Doyle immediately invested the proceeds from the
bond issue in land. The land was leased for an annual $125,000 of cash revenue, which was collected on December 31
of each year, beginning December 31, Year 2.
Required
a. Organize the transaction data in accounts under the accounting equation for Year 2 and Year 3. (Enter any decreases to
account balances with a minus sign. Not all cells in the "Accounts Titles for Retained Earnings" column may require an input -
leave cells blank if there is no corresponding input needed.)
DOYLE COMPANY
Effect of Events on the Accounting Equation
Year 2 and Year 3
Assets
=
Liabilities
Stockholders'
+
Equity
Accounts Titles for
Retained Earnings
ces
Event
Bonds
Retained
Cash
Land
!!
Payable
Earnings
Year 2
1/1
+
=
1/1
+
12/31
12/31
+
Bal.
Year 3
Beg. bal
=
12/31
12/31
+.
End. bal.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbac5cd56-9885-4a25-8e51-dfc1bb78a29e%2F83646aae-4b42-4e9f-9e1d-8d642667d132%2Fp0ra01q_processed.jpeg&w=3840&q=75)
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