Statement of Retained Balance Sheet Earnings Income Statement Prepare the income statement for the year ended December 31.
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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Stark company has the following adjusted accounts and balances at its December 31 year-end.
$ 27,000 Accumulated depreciation-Buildings
4,100 Accounts receivable
820 Utilities expense
9,500 Interest payable
2,000 Unearned revenue
42,000 Supplies expense
9,100 Buildings
3,400 Dividends
22,800 Depreciation expense-Buildings
98,000 Supplies
100,000
Notes payable
Prepaid insurance
Interest expense
Accounts payable
Wages payable
Cash
Wages expense
Insurance expense
Common stock
Retained earnings
Services revenue
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Income
Statement
Use the table of adjusted trial balance accounts for Stark Company to prepare the (1) income statement and (2)
statement of retained earnings for the year ended December 31 and (3) balance sheet at December 31. The Retained
Earnings account balance was $98,000 on December 31 of the prior year.
Expenses
Statement of
Retained
Earnings
Prepare the income statement for the year ended December 31.
STARK COMPANY
Income Statement
For Year Ended December 31
Total expenses
Balance Sheet
$ 31,000
7,200
2,900
740
1,600
520
200,000
11,000
10,000
1,600](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F746c528c-1bb1-4b60-ba79-65bd8df817d1%2Fbe61f484-0f1c-4feb-80cb-3d9932a983f0%2Fs58q8pw_processed.png&w=3840&q=75)
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