The trial balance of Rollins Incorporated included the following accounts as of December 31, 2024:
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 trial balance of Rollins Incorporated included the following accounts as of December 31,
2024:
Sales revenue
Interest revenue
Loss on sale of investments
Loss on debt investments
Gain on projected benefit obligation
Cost of goods sold
Selling expense
Restructuring costs
Interest expense
General and administrative expense
Debits
$20,000
Show Transcribed Text
145,000
4,310,000
390,000
175,000
10,000
290,000
Credits
$5,800,000
39,500
255,000
The loss on debt investments represents a decrease in the fair value of debt securities and is
classified as part of other comprehensive income. Rollins had 100,000 shares of stock
outstanding throughout the year. Income tax expense has not yet been accrued. The
effective tax rate is 25%.
Required: Prepare a 2024 income statement for Rollins Incorporated with earnings per
share disclosure.
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