The following data, presented in alphabetical order, are taken from the records of Nieto Corporation. Accounts Payable $260,000 Accounts Receivable $140,000 Accumulated depreciation- buildings $180,000 Accumulated depreciation-equipment $52,000 Allowance for doubtful accounts $6,000 Bonds payable (10% due 2023) $500,000 Building $950,000 Cash $62,000 Common Stock ($10 par value; 500,000 shares authorized, 150,00 shares issued) $1,500,000 Dividends payable $80,000 Equipment $275,000 Fair Value Adjustment-available-for-sale securities (Dr) $8,000 Goodwill $200,000 Income taxes payable $120,000 Inventory $170,000 Investment in Mara common stock (30% ownership) at equity $380,000 Investment in Sasse common stock (10% ownership), at cost $278,000 Land $390,000 Notes Payable (due 2016) $70,000 Paid-in Capital in excess of par- common stock $130,000 Premium on bonds payable $40,000 Prepaid insurance $16,000 Retained earnings $103,000 Short-term investments, at fair value (and cost) $180,000 Unrealized gain-available-for-sale-securities $8,000 The investment in Sasse common stock is considered to be a long-term available-for-sale security. Prepare a classified balance sheet at December 31, 2015.
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 following data, presented in alphabetical order, are taken from the records of Nieto Corporation.
Accounts Payable $260,000
Accounts Receivable $140,000
Accumulated depreciation-equipment $52,000
Allowance for doubtful accounts $6,000
Bonds payable (10% due 2023) $500,000
Building $950,000
Cash $62,000
Common Stock ($10 par value; 500,000 shares authorized, 150,00 shares issued) $1,500,000
Dividends payable $80,000
Equipment $275,000
Fair Value Adjustment-available-for-sale securities (Dr) $8,000
Income taxes payable $120,000
Inventory $170,000
Investment in Mara common stock (30% ownership) at equity $380,000
Investment in Sasse common stock (10% ownership), at cost $278,000
Land $390,000
Notes Payable (due 2016) $70,000
Paid-in Capital in excess of par- common stock $130,000
Premium on bonds payable $40,000
Prepaid insurance $16,000
Short-term investments, at fair value (and cost) $180,000
Unrealized gain-available-for-sale-securities $8,000
The investment in Sasse common stock is considered to be a long-term available-for-sale security.
Prepare a classified balance sheet at December 31, 2015.
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