Chapter 21, Problem 21.18E

To determine

Statement of cash flows: This statement reports all the cash transactions which are responsible for inflow and outflow of cash, and result of these transactions is reported as ending balance of cash at the end of reported period.

Retained earnings: Retained earnings are the portion of earnings kept by the business for the purpose of reinvestments, payment of debts, or for future growth.

Investing activities: In the investing activities section of the cash flow statement, increase and decrease in the long-term assets representing outflow and inflow of cash on account of investing activities is reported.

Financing activities: In the financing activities section of the cash flow, increase and decrease in the long-term liabilities and equities representing inflow and outflow of cash on account of financing activities are reported.

Journal: Journal is the method of recording monetary business transactions in chronological order. It records the debit and credit aspects of each transaction to abide by the double-entry system.

Rules of Debit and Credit:

Following rules are followed for debiting and crediting different accounts while they occur in business transactions:

• Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
• Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.

To Journalize: The transactions of Company GL.