The balance sheet items for Collier Butcher Shop (arranged in alphabetical order) were as followS at July 1, 2015. (You are to compute the missing fīgure for Retained Earnings.) LOI-3, LO2-4, LO2-6 $ 7,000 8,200 Equlpment and Fixtures..... Preparing a Balance Sheet and Statement of Cash Flows; Effects of Business Transactions Accounts Payable Accounts Recelvable. Building .... Capital Stock...... PROBLEM 2.78 Land... Notes Payable . Salaries Payable.. Supplies .. $25,000 90,000 50,000 40,000 100,000 4,100 3,700 Cash.... 7,000 During the next few days, the following transactions occurred: July 4 Additional capital stock was sold for $30,000. The accounts payable were paid in full. (No payment was made on the notes payable or salaries payable.) Jaly 5 Equipment was purchased at a cost of S6,000 to be paid within 10 days. Supplies were purchased for $1,000 cash from a restaurant supply center that was going out of business. These supplies would have cost $2,000 if purchased through normal channels. Instructions a. Prepare a balance sheet at July 1, 2015. b. Prepare a balance sheet at July S, 2015, and a statement of cash flows for July 1-5. Classify the payment of accounts payable and the purchase of supplies as operating activities. Assume the notes payable do not come due for several years. Is Collier Butcher Shop in a ancial position on July 1 or on July 5? Explain briefly.
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.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 4 images
