Teller Corporation's post-closing trial balance at December 31, 2020, was as follows. Teller CorporationPost-Closing Trial BalanceDecember 31, 2020 00 000Dr.000 0000 000Cr.000 Accounts payable 00 $ 310,000 Accounts receivable $ 480,000 00 Accumulated depreciation—building and equipment 00 185,000 Allowance for doubtful accounts 00 30,000 Bonds payable 00 700,000 Building and equipment 1,450,000 00 Cash 190,000 00 Dividends payable on preference shares—cash 00 4,000 Inventories 560,000 00 Land 400,000 00 Prepaid expenses 40,000 00 Retained earnings 00 201,000 Share capital—ordinary ($1 par value) 00 200,000 Share capital—preference ($50 par value) 00 500,000 Share premium—ordinary 00 1,000,000 Share premium—treasury 00 160,000 Treasury shares—ordinary at cost 110170,000 111170,000 Totals $3,290,000 $3,290,000 At December 31, 2020, Teller had the following number of ordinary and preference shares. 00 Ordinary Preference Authorized 600,000 60,000 Issued 200,000 10,000 Outstanding 190,000 10,000 The dividends on preference shares are $4 cumulative. In addition, the preference shares have a preference in liquidation of $50 per share. Instructions Prepare the equity section of Teller's statement of financial position at December 31, 2020.
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.
Teller Corporation's post-closing
| Teller Corporation Post-Closing Trial Balance December 31, 2020 |
|||
| 00 | 000Dr.000 | 0000 | 000Cr.000 |
| Accounts payable | 00 |
$ 310,000
|
|
|
$ 480,000
|
00 | ||
| 00 |
185,000
|
||
| Allowance for doubtful accounts | 00 |
30,000
|
|
| Bonds payable | 00 |
700,000
|
|
| Building and equipment |
1,450,000
|
00 | |
| Cash |
190,000
|
00 | |
| Dividends payable on |
00 |
4,000
|
|
| Inventories |
560,000
|
00 | |
| Land |
400,000
|
00 | |
| Prepaid expenses |
40,000
|
00 | |
| 00 |
201,000
|
||
| Share capital—ordinary ($1 par value) | 00 |
200,000
|
|
| Share capital—preference ($50 par value) | 00 |
500,000
|
|
| Share premium—ordinary | 00 |
1,000,000
|
|
| Share premium—treasury | 00 |
160,000
|
|
| Treasury shares—ordinary at cost |
110170,000
|
111170,000
|
|
| Totals |
$3,290,000
|
$3,290,000
|
At December 31, 2020, Teller had the following number of ordinary and preference shares.
| 00 |
Ordinary
|
Preference
|
| Authorized |
600,000
|
60,000
|
| Issued |
200,000
|
10,000
|
| Outstanding |
190,000
|
10,000
|
The dividends on preference shares are $4 cumulative. In addition, the preference shares have a preference in liquidation of $50 per share.
Instructions
Prepare the equity section of Teller's
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