The balances of Adventure Travel Service's accounting equation items for the year ended April 30, 2019, are listed below. Jerome Foley, the owner, invested an additional $60,000 in the business during the year and withdrew cash of $40,000 for personal use. Jerome Foley, capital as of May 1, 2018, was $1,020,000. Labels and Amount Descriptions Accounts Labels Fees earned $2,180,000 April 30, 2019 Office expense 400,000 Amount Descriptions Miscellaneous expense 25,000 Net income Wages expense 1,300,000 Jerome Foley, capital Accounts payable 105,000 Total assets Accounts receivable 485,000 Total expenses Cash 197,000 Total liabilities Land 900,000 Total liabilities and owner's equity Supplies 18,000 Total revenue Prepare a balance sheet as of April 30, 2019. Refer to the lists of Accounts, Labels, and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be sure to complete the statement heading. When entering assets, enter them in order of liquidity.
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 balances of Adventure Travel Service's accounting equation items for the year ended April 30, 2019, are listed below. Jerome Foley, the owner, invested an additional $60,000 in
the business during the year and withdrew cash of $40,000 for personal use. Jerome Foley, capital as of May 1, 2018, was $1,020,000.
Labels and Amount Descriptions
Accounts
Labels
Fees earned
$2,180,000
April 30, 2019
Office expense
400,000
Amount Descriptions
Miscellaneous expense
25,000
Net income
Wages expense
1,300,000
Jerome Foley, capital
Accounts payable
105,000
Total assets
Accounts receivable
485,000
Total expenses
Cash
197,000
Total liabilities
Land
900,000
Total liabilities and owner's equity
Supplies
18,000
Total revenue
Prepare a balance sheet as of April 30, 2019. Refer to the lists of Accounts, Labels, and Amount Descriptions provided for the exact wording of the answer choices for text entries. Be
sure to complete the statement heading. When entering assets, enter them in order of liquidity.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F339d35c2-7d78-4a99-8b50-4c3e34c63697%2F1ca4952e-f61e-4ccf-a4ef-7ccde7f06853%2F5474w5.png&w=3840&q=75)
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