Using the adjusted trial balance data below for the Rollins Company, prepare a Multi-step Income Statement Note: Enter all amounts as positive amounts and in order of how they appear on the trial balance Rollins Company Adjusted Trial Balance December 31, 2020 Account Debit Credit Cash 240,000 Accounts Receivable 966,000 Merchandise Inventory 1,690,000 Supplies 13,500 Prepaid Rent 8,000 Land 85,000 Equipment 3,573,000 Accum. Deprec. - Equip. 1,820,000 Accounts Payable 342,000 Salaries Payable 45,500 Unearned Revenue 40,000 Sales Tax Payable 22,500 Note Payable 300,000 Common Stock 500,000 Retained Earnings 2,629,000 Dividends 10,000 Sales 11,673,500 Sales Discounts 103,500 Sales Returns and Allowances 132,000 Interest Income 25,000 Cost of Goods Sold 7,650,000 Office Salaries Expense 650,000 Sales Salaries Expense 916,000 Rent Expense 94,000 Insurance Expense 48,000 Advertising Expense 220,000 Depreciation Expense 190,000 Freight Expense 55,000 Supplies Expense 27,000 Interest Expense 23,000 Utilities Expense 235,000 Income Tax Expense 415,000 Miscellaneous Expense 53,500 Total 17,397,500 17,397,500
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.
| Using the adjusted |
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| Note: Enter all amounts as positive amounts and in order of how they appear on the trial balance | |||||||||
| Rollins Company | |||||||||
| Adjusted Trial Balance | |||||||||
| December 31, 2020 | |||||||||
| Account | Debit | Credit | |||||||
| Cash | 240,000 | ||||||||
| 966,000 | |||||||||
| Merchandise Inventory | 1,690,000 | ||||||||
| Supplies | 13,500 | ||||||||
| Prepaid Rent | 8,000 | ||||||||
| Land | 85,000 | ||||||||
| Equipment | 3,573,000 | ||||||||
| Accum. Deprec. - Equip. | 1,820,000 | ||||||||
| Accounts Payable | 342,000 | ||||||||
| Salaries Payable | 45,500 | ||||||||
| Unearned Revenue | 40,000 | ||||||||
| Sales Tax Payable | 22,500 | ||||||||
| Note Payable | 300,000 | ||||||||
| Common Stock | 500,000 | ||||||||
| 2,629,000 | |||||||||
| Dividends | 10,000 | ||||||||
| Sales | 11,673,500 | ||||||||
| Sales Discounts | 103,500 | ||||||||
| Sales Returns and Allowances | 132,000 | ||||||||
| Interest Income | 25,000 | ||||||||
| Cost of Goods Sold | 7,650,000 | ||||||||
| Office Salaries Expense | 650,000 | ||||||||
| Sales Salaries Expense | 916,000 | ||||||||
| Rent Expense | 94,000 | ||||||||
| Insurance Expense | 48,000 | ||||||||
| Advertising Expense | 220,000 | ||||||||
| 190,000 | |||||||||
| Freight Expense | 55,000 | ||||||||
| Supplies Expense | 27,000 | ||||||||
| Interest Expense | 23,000 | ||||||||
| Utilities Expense | 235,000 | ||||||||
| Income Tax Expense | 415,000 | ||||||||
| Miscellaneous Expense | 53,500 | ||||||||
| Total | 17,397,500 | 17,397,500 | |||||||
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