The following selected accounts and their current balances appear in the ledger of Maroon Co. for the fiscal year ended December 31, 2019. Accounts Payable 32,480 LT Note Payable 44,800 Misc. Administrative Accounts Receivable 96,800 1,280 Accum Depr- Office Equip Accum Depr - Store Equip Advertising Expense Expense Misc. Selling Expense Office Equipment 10,240 1,280 27,360 68,000 35,040 Office Salaries Expense Office Supplies Office Supplies Expense Paid-in Capital 67,320 Cash 123,000 4,480 Common Stock 75,000 1,040 Cost of Goods Sold 620,000 52,000 Customer refunds Payable Prepaid Insurance Rent Expense 12,000 2,720 Depr Expense - Office Equip Depr Expense - Store Equip 10,160 25,080 Retained Earnings Salaries Payable 5,120 301,600 1.920 992,000 Dividends 28,000 Insurance Expense Interest Expense 3,120 Sales 4,000 Sales salaries Expense 138,560 Inventory 140,000 Store Equipment 122,400 Maroon Co. has 10,000 shares of common stock authorized and 7,500 shares issued and outstanding with a par value $10. Others on your team prepared the income statement and the statement of stockholders' equity. Prepare the classified balance sheet in good form for Sciatic Co at December 31, 2019.
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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