The records for Bosch Co. show this data for 2019: ● Gross profit on installment sales recorded on the books was $340,000. Actual collections of installment receivables (how it is recorded for tax) was $200,000 in 2019 , $40,000 in 2020 and $100,000 in 2021. ● Machinery was acquired in January for $220,000. Straight-line depreciation over a five-year life (no salvage value) is used. For tax purposes, MACRS depreciation is used and Bosch may deduct 14% for 2019 37% for 2020, 28% for 2021, 15% for 2022 and 6% for 2023 . ● The estimated warranty liability related to 2019 sales expensed for book was $20,800. Actual repair costs under warranties deductible for tax during 2019 were $12,800. The remainder will be paid in 2020. ● Each year the company receives $5,000 in municipal bond dividend income. (not taxable). ● Pretax financial income is $514,800 for 2019. The tax rate is 30%. Pretax financial income is $483,000 for 2020. Assume there were no additional difference in 2020. Prepare the journal entry to record income taxes for 2019 and 2020. (One entry for each year. If you use the worksheet - it will be easier for me to give you points if you make a mistake (IT IS NOT 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.
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The records for Bosch Co. show this data for 2019:
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Prepare the |
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