Required information [The following information applies to the questions displayed below.] Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its second year, its income statement accounts had zero balances and its balance sheet account balances were as follows: Cash Accounts Receivable Supplies Equipment Land Buildings $ 8,100 Accounts Payable. 38,000 Deferred Revenue (deposits): 2,800 Notes Payable (long-term) 13,000 Common Stock 7,300 Retained Earnings 22,300 $ 11,350 5,000 49,500 16,500 9,150 Following are the January transactions: a. Received a $695 deposit from a customer who wanted her piano rebuilt in February. b. Rented a part of the building to a bicycle repair shop: $325 rent received for January. c. Delivered five rebuilt pianos to customers who paid $15,600 in cash. d. Delivered two rebuilt pianos to customers for $8,000 charged on account. e. Received $5,400 from customers as payment on their accounts. f. Received an electric and gas utility bill for $670 for January services to be paid in February. g. Ordered $1,185 in supplies. h. Paid $3,000 on account in January. i. Paid $15,500 in wages to employees in January for work done this month. j. Received and paid cash for the supplies in (g).
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.
![Required information
[The following information applies to the questions displayed below.]
Ricky's Piano Rebuilding Company has been operating for one year. On January 1, at the start of its
second year, its income statement accounts had zero balances and its balance sheet account balances
were as follows:
Cash
Accounts Receivable
Supplies
Equipment
Land
Buildings
$ 8,100 Accounts Payable.
38,000 Deferred Revenue (deposits):
2,800 Notes Payable (long-term)
13,000 Common Stock
7,300 Retained Earnings
22,300
$ 11,350
5,000
49,500
16,500
9,150
Following are the January transactions:
a. Received a $695 deposit from a customer who wanted her piano rebuilt in February.
b. Rented a part of the building to a bicycle repair shop: $325 rent received for January.
c. Delivered five rebuilt pianos to customers who paid $15,600 in cash.
d. Delivered two rebuilt pianos to customers for $8,000 charged on account.
e. Received $5,400 from customers as payment on their accounts.
f. Received an electric and gas utility bill for $670 for January services to be paid in February.
g. Ordered $1,185 in supplies.
h. Paid $3,000 on account in January.
i. Paid $15,500 in wages to employees in January for work done this month.
j. Received and paid cash for the supplies in (g).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F548f144b-9127-46bb-ba4e-7cbbebe00421%2F9c9eb9a6-668b-4c68-b1b8-8af204c7a3f7%2F7fvm69d_processed.jpeg&w=3840&q=75)
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