The following are selected ledger accounts of Crane Corporation at December 31, 2020. Cash Inventory Sales revenue Unearned sales revenue Purchases Sales discounts Purchase discounts Selling expenses Accounting and legal services Insurance expense office) Advertising experse Delivery expense Depreciation expense (office equipment Depreciation expense (sales equipment) $166,500 481.500 3.847.500 105,300 2.507,400 30.600 24.300 62.100 29,700 21,000 48.600 83.700 41200 32,400 Salaries and wages expense (sales) Salaries and wages expense (office) Purchase returns Sales returns and allowances Freight-in Accounts receivable Sales commissions Telephone and internet expense (sales) Utilities expense (office) Miscellaneous office expenses Rent revenue Casualty loss (before tad interest expense Common stock (10par) $255,600 311,400 13.500 71.100 64,800 128,250 74,700 15.300 28,800 7,200 216,000 63,000 158,400 792,400 Crane's effective tax rate on all items is 20% Aphysical inventory indicates that the ending inventory is $686,000 Prepare a condemed 2020 income statement for Crane Corporation and earnings per shore
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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