The adjusted Trail Balance of Saudi Gold Co Contained the following accounts at November 30, the end of the company’s fiscal year : Saudi Gold Co. Adjusted Trial Balance November 30, 2019 Dr. Cr. Cash............................................................... Sr 28,700 Accounts Receivable..................................... 33,700 Inventory........................................................ 45,000 Supplies......................................................... 1,500 Equipment...................................................... 133,000 Accumulated Depreciation—Equipment..... Sr 39,000 Notes Payable................................................ 51,000 Accounts Payable......................................... 48,500 Share Capital—Ordinary............................... 90,000 Retained Earnings......................................... 8,000 Sales Revenue............................................... 757,200 Sales Returns and Allowances................................................. 4,200 Cost of Goods Sold....................................... 495,400 Salaries Expense........................................... 140,000 Advertising Expense..................................... 26,400 Utilities Expense............................................ 14,000 Maintenance and Repairs Expense.............. 12,100 Delivery Expense........................................... 16,700 Rent Expense................................................ 24,000 Supplies Expense.......................................... 4,000 Depreciation Expense—Equipment............. 15,000 Interest Expense............................................ 11,000 Interest Payable............................................. 11,000 Totals....................................................... €1,004,700 €1,004,700 Additional information: 1. Salaries and wages expense is 70% selling and 30% administrative. 2. Rent expense and utilities expense are 80% selling and 20% administrative. 3. €30,000 of notes payable are due for payment next year. 4. Maintenance and repairs expense is 100% administrative. 4. Maintenance and repairs expense is 100% administrative. Instructions: Prepare an: 1. income statement 2. Retained earnings statement for the year
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 adjusted Trail Balance of Saudi Gold Co Contained the following accounts at November 30, the end of the company’s fiscal year :
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Saudi Gold Co. Adjusted |
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November 30, 2019 |
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Dr. |
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Cr. |
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Cash............................................................... |
Sr 28,700 |
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33,700 |
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Inventory........................................................ |
45,000 |
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Supplies......................................................... |
1,500 |
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Equipment...................................................... |
133,000 |
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Sr 39,000 |
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Notes Payable................................................ |
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51,000 |
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Accounts Payable......................................... |
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48,500 |
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Share Capital—Ordinary............................... |
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90,000 |
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8,000 |
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Sales Revenue............................................... |
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757,200 |
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Sales Returns and |
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Allowances................................................. |
4,200 |
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Cost of Goods Sold....................................... |
495,400 |
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Salaries Expense........................................... |
140,000 |
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Advertising Expense..................................... |
26,400 |
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Utilities Expense............................................ |
14,000 |
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Maintenance and Repairs Expense.............. |
12,100 |
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Delivery Expense........................................... |
16,700 |
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Rent Expense................................................ |
24,000 |
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Supplies Expense.......................................... |
4,000 |
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Depreciation Expense—Equipment............. |
15,000 |
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Interest Expense............................................ |
11,000 |
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Interest Payable............................................. |
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11,000 |
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Totals....................................................... |
€1,004,700 |
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€1,004,700 |
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Additional information: 1. Salaries and wages expense is 70% selling and 30% administrative. 2. Rent expense and utilities expense are 80% selling and 20% administrative. 3. €30,000 of notes payable are due for payment next year. 4. Maintenance and repairs expense is 100% administrative. 4. Maintenance and repairs expense is 100% administrative.
Instructions: Prepare an: 1. income statement 2. Retained earnings statement for the year
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