The following account balances were included in the trial balance of Bramble Corporation at June 30, 2023: Sales revenue Cost of goods sold Salaries and wages expense (sales) Sales commission expense Advertising expense (sales) Freight out Entertainment expense (sales) Telephone and internet expense (sales) Depreciation of sales equipment Repairs and maintenance expense (sales) Miscellaneous expenses (sales) Supplies expense (office) Depreciation expense on office furniture and equipment $1,839,650 1,061,770 52,660 98,000 29,630 22,100 15,120 9,530 5,080 6,600 5,115 3,950 7,750 Telephone and Internet expense (office) Salaries and wages (office) Supplies expense (sales) Repairs and maintenance expense (office) Depreciation understatement due to error-2021 (net of tax of $3,300) Miscellaneous expense (office) Dividend revenue Interest expense Income tax expense Dividends declared on preferred shares Dividends declared on common shares $2,820 7,920 4,850 10,030 18,400 7,400 38,300 19,500 133,100 9,265 33,400 During 2023, Bramble incurred production salary and wage costs of $698,900, consumed raw materials and other production supplies of $477,170, and had an increase in work-in-process and finished goods inventories of $114,300. The Retained Earnings account had a balance of $274,000 at June 30, 2023, before closing. There are 180,000 common shares outstanding. Bramble has elected to adopt IFRS. (Hint: Production payroll and materials costs reduced by the increase in ending work-in-process and finished goods inventories= the cost of goods sold.)
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.
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