The following trial balance pertains to Benji’s Grocery as of January 1, 2018: Account Title Beginning Balances Cash $ 64,000 Accounts receivable 12,000 Merchandise inventory 90,000 Accounts payable 7,500 Common stock 89,000 Retained earnings 69,500 The following events occurred in 2018. Assume that Benji’s uses the periodic inventory method. Purchased land for $30,000 cash. Purchased merchandise on account for $230,000, terms 1/10, n/45. Paid freight of $2,100 cash on merchandise purchased FOB shipping point. Returned $8,600 of defective merchandise purchased in Event 2. Sold merchandise for $186,000 cash. Sold merchandise on account for $236,000, terms 2/10, n/30. Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2. Paid $28,500 cash for selling expenses. Collected $156,000 of the accounts receivable from Event 6 within the discount period. Collected $56,000 of the accounts receivable but not within the discount period. Paid $17,100 of other operating expenses. A physical count indicated that $48,300 of inventory was on hand at the end of the accounting period. what is the net income?
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
| Account Title | Beginning Balances | ||||
| Cash | $ | 64,000 | |||
| 12,000 | |||||
| Merchandise inventory | 90,000 | ||||
| Accounts payable | 7,500 | ||||
| Common stock | 89,000 | ||||
| 69,500 | |||||
The following events occurred in 2018. Assume that Benji’s uses the periodic inventory method.
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Purchased land for $30,000 cash.
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Purchased merchandise on account for $230,000, terms 1/10, n/45.
-
Paid freight of $2,100 cash on merchandise purchased FOB shipping point.
-
Returned $8,600 of defective merchandise purchased in Event 2.
-
Sold merchandise for $186,000 cash.
-
Sold merchandise on account for $236,000, terms 2/10, n/30.
-
Paid cash within the discount period on accounts payable due on merchandise purchased in Event 2.
-
Paid $28,500 cash for selling expenses.
-
Collected $156,000 of the accounts receivable from Event 6 within the discount period.
-
Collected $56,000 of the accounts receivable but not within the discount period.
-
Paid $17,100 of other operating expenses.
-
A physical count indicated that $48,300 of inventory was on hand at the end of the accounting period.
what is the net income?
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