Use the adjusted trial balance for Stockton Company to answer the question that follows. Stockton Company Adjusted Trial Balance December 31 Account No. Debit Balances Credit Balances Cash 11 6,323 Accounts Receivable 12 2,013 Prepaid Expenses 13 636 Equipment 18 13,301 Accumulated Depreciation 19 1,235 Accounts Payable 21 1,477 Notes Payable 22 4,321 Bob Steely, Capital 31 12,784 Bob Steely, Drawing 32 668 Fees Earned 41 7,077 Wages Expense 51 2,515 Rent Expense 52 724 Utilities Expense 53 427 Depreciation Expense 54 220 Miscellaneous Expense 59 67 Totals 26,894 26,894 Use the adjusted trial balance for Stockton Company. Determine the net income (loss) for the period. a.Net loss is $6,066. b.Net income is $3,124. c.Net income is $26,894. d.Net loss is $3,124.
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.
Use the adjusted
| Stockton Company Adjusted Trial Balance December 31 |
|||
| Account No. |
Debit Balances |
Credit Balances |
|
| Cash | 11 | 6,323 | |
| 12 | 2,013 | ||
| Prepaid Expenses | 13 | 636 | |
| Equipment | 18 | 13,301 | |
| 19 | 1,235 | ||
| Accounts Payable | 21 | 1,477 | |
| Notes Payable | 22 | 4,321 | |
| Bob Steely, Capital | 31 | 12,784 | |
| Bob Steely, Drawing | 32 | 668 | |
| Fees Earned | 41 | 7,077 | |
| Wages Expense | 51 | 2,515 | |
| Rent Expense | 52 | 724 | |
| Utilities Expense | 53 | 427 | |
| Depreciation Expense | 54 | 220 | |
| Miscellaneous Expense | 59 | 67 | |
| Totals | 26,894 | 26,894 |
Use the adjusted trial balance for Stockton Company. Determine the net income (loss) for the period.
Net Income or loss of the business means how much business has earned after deducting all the expenses from the revenues of the business.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
