The following is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company. Account Title Debits Credits Cash $ 69,000 Accounts receivable 164,000 Inventory 287,000 Prepaid expenses 152,000 Equipment 324,000 Accumulated depreciation $ 112,000 Investments 144,000 Accounts payable 62,000 Interest payable 22,000 Deferred revenue 82,000 Income taxes payable 32,000 Notes payable 210,000 Allowance for uncollectible accounts 18,000 Common stock 402,000 Retained earnings 200,000 Totals $ 1,140,000 $ 1,140,000 Additional information: Prepaid expenses include $124,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility. Investments include $32,000 in Treasury bills purchased on November 30, 2021. The bills mature on January 30, 2022. The remaining $112,000 is an investment in equity securities that the company intends to sell in the next year. Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less. The notes payable account consists of the following: a $42,000 note due in six months. a $102,000 note due in six years. a $66,000 note due in three annual installments of $22,000 each, with the next installment due August 31, 2022. The common stock account represents 402,000 shares of no par value common stock issued and outstanding. The corporation has 804,000 shares authorized. Required: Prepare a classified balanced sheet for the Weismuller Publishing Company at December 31, 2021. (Amounts to be deducted should be indicated by a minus sign.)
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 is the ending balances of accounts at December 31, 2021, for the Weismuller Publishing Company.
| Account Title | Debits | Credits | ||||
| Cash | $ | 69,000 | ||||
| 164,000 | ||||||
| Inventory | 287,000 | |||||
| Prepaid expenses | 152,000 | |||||
| Equipment | 324,000 | |||||
| $ | 112,000 | |||||
| Investments | 144,000 | |||||
| Accounts payable | 62,000 | |||||
| Interest payable | 22,000 | |||||
| Deferred revenue | 82,000 | |||||
| Income taxes payable | 32,000 | |||||
| Notes payable | 210,000 | |||||
| Allowance for uncollectible accounts | 18,000 | |||||
| Common stock | 402,000 | |||||
| 200,000 | ||||||
| Totals | $ | 1,140,000 | $ | 1,140,000 | ||
Additional information:
- Prepaid expenses include $124,000 paid on December 31, 2021, for a two-year lease on the building that houses both the administrative offices and the manufacturing facility.
- Investments include $32,000 in Treasury bills purchased on November 30, 2021. The bills mature on January 30, 2022. The remaining $112,000 is an investment in equity securities that the company intends to sell in the next year.
- Deferred revenue represents customer prepayments for magazine subscriptions. Subscriptions are for periods of one year or less.
- The notes payable account consists of the following:
- a $42,000 note due in six months.
- a $102,000 note due in six years.
- a $66,000 note due in three annual installments of $22,000 each, with the next installment due August 31, 2022.
- The common stock account represents 402,000 shares of no par value common stock issued and outstanding. The corporation has 804,000 shares authorized.
Required:
Prepare a classified
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