The following selected accounts and their current balances appear in the ledger of Clairemont Co. for the fiscal year ended May 31, 2019: Cash $ 238,400 Accounts Receivable 960,300 Merchandise Inventory 1,644,400 Estimated Returns Inventory 22,500 Office Supplies 6,500 Prepaid Insurance 3,900 Office Equipment 830,000 Accumulated Depreciation-Office Equipment 545,800 Store Equipment 3,601,100 Accumulated Depreciation-Store Equipment 1,823,000 Accounts Payable 365,400 Customer Refunds Payable 22,500 Salaries Payable 39,900 Note Payable (final payment due 2022) 308,000 Kristina Marble, Capital 3,410,300 Kristina Marble, Drawing 90,600 Sales 11,285,800 Cost of Merchandise Sold 7,857,300 Sales Salaries Expense 904,200 Advertising Expense 555,700 Depreciation Expense-Store Equipment 146,600 Miscellaneous Selling Expense 35,800 Office Salaries Expense 668,700 Rent Expense 96,200 Depreciation Expense-Office Equipment 41,000 Insurance Expense 46,800 Office Supplies Expense 24,900 Miscellaneous Administrative Expense 5,200 Interest Expense 20,600 Required: 1. Prepare a multiple-step income statement. In the Other revenue and Operating Expenses section only, enter amounts that represent Other revenue and Operating Expenses as negative numbers using a minus sign.* 2. Prepare a statement of owner’s equity. Use a minus (-) sign to indicate any negative amount.* 3. Prepare a report form of balance sheet, assuming that the current portion of the note payable is $56,900. “Less” or “Plus” will automatically appear if it is required.* 4. Which type of income statement shows intermediate balances? *Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required.
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.
| Cash | $ 238,400 |
| 960,300 | |
| Merchandise Inventory | 1,644,400 |
| Estimated Returns Inventory | 22,500 |
| Office Supplies | 6,500 |
| Prepaid Insurance | 3,900 |
| Office Equipment | 830,000 |
| 545,800 | |
| Store Equipment | 3,601,100 |
| Accumulated Depreciation-Store Equipment | 1,823,000 |
| Accounts Payable | 365,400 |
| Customer Refunds Payable | 22,500 |
| Salaries Payable | 39,900 |
| Note Payable (final payment due 2022) | 308,000 |
| Kristina Marble, Capital | 3,410,300 |
| Kristina Marble, Drawing | 90,600 |
| Sales | 11,285,800 |
| Cost of Merchandise Sold | 7,857,300 |
| Sales Salaries Expense | 904,200 |
| Advertising Expense | 555,700 |
| Depreciation Expense-Store Equipment | 146,600 |
| Miscellaneous Selling Expense | 35,800 |
| Office Salaries Expense | 668,700 |
| Rent Expense | 96,200 |
| Depreciation Expense-Office Equipment | 41,000 |
| Insurance Expense | 46,800 |
| Office Supplies Expense | 24,900 |
| Miscellaneous Administrative Expense | 5,200 |
| Interest Expense | 20,600 |
| Required: | |
| 1. | Prepare a multiple-step income statement. In the Other revenue and Operating Expenses section only, enter amounts that represent Other revenue and Operating Expenses as negative numbers using a minus sign.* |
| 2. | Prepare a statement of owner’s equity. Use a minus (-) sign to indicate any negative amount.* |
| 3. | Prepare a report form of |
| 4. | Which type of income statement shows intermediate balances? |
| *Be sure to complete the statement headings. Refer to the problem data and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries. A colon (:) will automatically appear if it is required. |
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