The account balances of Awesome Travel Services at December 31 are listed below. There were no additional investments or dividends by Awesome Travel Services during the year. Accounts Amount Accounts Amount Accounts payable $12,000 Retained earnings (Jan. 1) $6,000 Accounts receivable 14,000 Supplies 1,000 Cash 18,000 Income taxes expense 1,300 Common stock 4,000 Utilities expense 8,000 Computer equipment 21,000 Wages expense 25,000 Fees earned 78,000 Supplies expense 1,700 Rent expense 10,000 Required:
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.
![The account balances of Awesome Travel Services at December 31 are listed below. There were no additional investments or dividends by
Awesome Travel Services during the year.
Accounts
Amount
Accounts
Amount
Accounts payable
$12,000 Retained earnings (Jan. 1)
$6,000
Accounts receivable
14,000 Supplies
1,000
Cash
18,000
Income taxes expense
1,300
Common stock
4,000
Utilities expense
8,000
Computer equipment
21,000
Wages expense
25,000
Fees earned
78,000
Supplies expense
1,700
Rent expense
10,000
Required:
Prepare an income statement, a statement of stockholder's equity, and a balance sheet as of December 31. Refer to the lists of Accounts
in the information given, Labels, and Amount Descriptions for the exact wording of the answer choices for text entries. You will not need
to enter colons (:) on the financial statements. Be sure to complete the statement heading.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3f358c3-1caa-46b1-886c-76c157fb1ef8%2F7631a341-a51f-4c76-8d18-753189be1ab0%2Fo6rlywq_processed.png&w=3840&q=75)
![Prepare a stockholder's equity statement for the year ended December 31. Refer to the lists of Labels, and Amount Descriptions for the exact
wording of the answer choices for text entries. Be sure to complete the statement heading. Entries of 0 (zero) are not required and will be cleared if
entered.
Awesome Travel Services
Statement of Stockholders' Equity
(Label)
Retained
1
Common Stock
Total
Earnings
2
3
4](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa3f358c3-1caa-46b1-886c-76c157fb1ef8%2F7631a341-a51f-4c76-8d18-753189be1ab0%2Fmsrcpj9_processed.png&w=3840&q=75)
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