Required information Exercise 3-20 (Algo) Record transactions and prepare adjusting entries, adjusted trial balance, financial statements, and closing entries (LO3-3, 3-4, 3-5, 3-6, 3-7) [The following information applies to the questions displayed below.] On January 1, 2024, Red Flash Photography had the following balances: Cash, $15,000; Supplies, $8,300; Land, $63,000; Deferred Revenue, $5,300; Common Stock $53,000; and Retained Earnings, $28,000. During 2024, the company had the following transactions: Issue additional shares of common stock, $23,000. Provide services to customers for cash, $38,000, and on account, $33,000. Pay salaries to employees for work in 2024, $26,000. 3. August 31 4. October 1 5. November 17 Purchase rental space for one year, $15,000. Purchase supplies on account, $25,000. 6. December 30 Pay dividends, $2,300. The following information is available on December 31, 2024: 1. Employees are owed an additional $4,300 in salaries. 2. Three months of the rental space have expired. 1. February 15. 2. May 20 3. Supplies of $5,300 remain on hand. All other supplies have been used. 4. All of the services associated with the beginning deferred revenue have been performed. Exercise 3-20 (Algo) Part 4 4. Prepare an income statement, statement of stockholders' equity, and classified balance sheet.
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.
Kk.295.
![Required information
Exercise 3-20 (Algo) Record transactions and prepare adjusting entries, adjusted trial balance, financial
statements, and closing entries (LO3-3, 3-4, 3-5, 3-6, 3-7)
[The following information applies to the questions displayed below.]
On January 1, 2024, Red Flash Photography had the following balances: Cash, $15,000; Supplies, $8,300; Land, $63,000;
Deferred Revenue, $5,300; Common Stock $53,000; and Retained Earnings, $28,000. During 2024, the company had the
following transactions:
1. February 15
2. May 20
3. August 31
4. October 1
5. November 17
6. December 30
Issue additional shares of common stock, $23,000.
Provide services to customers for cash, $38,000, and on account, $33,000.
Pay salaries to employees for work in 2024, $26,000.
Purchase rental space for one year, $15,000.
Purchase supplies on account, $25,000.
Pay dividends, $2,300.
The following information is available on December 31, 2024:
1. Employees are owed an additional $4,300 in salaries.
2. Three months of the rental space have expired.
3. Supplies of $5,300 remain on hand. All other supplies have been used.
4. All of the services associated with the beginning deferred revenue have been performed.
Exercise 3-20 (Algo) Part 4
4. Prepare an income statement, statement of stockholders' equity, and classified balance sheet.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc099cd14-8e7a-497e-ad22-59566121e7f5%2Fb1823be0-b6a2-4151-b60f-c9748db2b99c%2Fwav5r0v_processed.jpeg&w=3840&q=75)
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