Required information [The following information applies to the questions displayed below.] The accounting records of Nettle Distribution show the following assets and liabilities as of December 31 for Year 1 and Year 2. December 31 Cash Accounts receivable Office supplies Office equipment Trucks Building Land Accounts payable Note payable Equity, December 31, Year 1 Add: Owner's investment Add: Net income Less: Dividends Year 1 $ 50,233 27,267 4,301. Equity, December 31, Year 2 132,033 51,666 0 0 71,685 2. Compute net income for Year 2 by comparing total equity amounts for these two years and using the following information: D Year 2, the owner invested $33,000 additional cash in the business in exchange for common stock, and the company paid a $3- cash dividend. $ Year 2 $ $9,002 21,377 3,150 140,640 60,666 172,234 42,980 35,554 115,214 193,815 33,000 226,815 34,800 192,015
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.
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Required information
[The following information applies to the questions displayed below.]
The accounting records of Nettle Distribution show the following assets and liabilities as of December 31 for Year 1 and
Year 2.
December 31
Cash
Accounts receivable
Office supplies
Office equipment
Trucks
Building
Land
Accounts payable
Note payable
Equity, December 31, Year 1
Add: Owner's investment
Add: Net income
Less: Dividends
Year 1
$ 50,233
27,267
4,301.
Equity, December 31, Year 2
132,033
51,666
2. Compute net income for Year 2 by comparing total equity amounts for these two years and using the following information: D
Year 2, the owner invested $33,000 additional cash in the business in exchange for common stock, and the company paid a $34
cash dividend.
71,685
0
0
0
$
$
Year 2
$9,002
21,377
3,150
140,640
60,666
172,234
42,980
35,554
115,214
193,815
33,000
226,815
34,800
192,015](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F567b80e9-1334-4f12-b5ee-8ff77d89f13f%2F366a662d-1aaa-4b13-944a-77846448308e%2F6997tmd_processed.png&w=3840&q=75)
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