A partial list of the accounts and ending account balances taken from the post-closing trial balance of the Dingle Corp. on December 31, 2020 is shown as follows: Account Amount Accumulated profit 820,000 Revaluation surplus 240,000 Bonds payable 440,000 Long-term investments in shares 420,000 Share premium on ordinary shares 920,000 Premium on bonds payable 60,000 Ordinary shares 800,000 Share premium on preference shares 224,000 Preference shares 600,000 Additional paid in capital from treasury shares 8,000 Unrealized decrease in the value of securities available for sale 6,000 Ordinary share warrants outstanding 40,000 Translation reserves, debit 100,000 Additional information: a. Ordinary shares is no-par, with stated value of P20 per share, 90,000 shares are authorized, 40,000 shares are issued and outstanding. 5,000 shares have been subscribed at a price of P56 per share. 25% of the total ordinary shares subscription are still outstanding as of the year end and are expected to be collected within the subsequent quarter. b. Preference share has a P100 par value, 8,000 shares are authorized, 6,000 shares are issued and outstanding. 900 shares are subscribed at a price of P140 per share. Each share is cumulative, convertible into five ordinary shares, and pays a 7% annual dividend. No dividends are in arrears. 20% of the total preference shares subscription are still outstanding as of the year end and are expected to be collected within the next six months. c. The subscriptions transactions both for the ordinary shares and preference shares are yet to be recorded. d. Bonds payable mature on July 1, 2024. These bonds carry a 12% annual interest rate, payable semiannually. The premium is being amortized using the straight-line method. How much is the total stockholders’ equity? Group of answer choices 3,952,000 4,152,000 4,164,000 4,068,800
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.
|
Account
|
Amount
|
|
|
820,000
|
|
Revaluation surplus
|
240,000
|
|
Bonds payable
|
440,000
|
|
Long-term investments in shares
|
420,000
|
|
Share premium on ordinary shares
|
920,000
|
|
Premium on bonds payable
|
60,000
|
|
Ordinary shares
|
800,000
|
|
Share premium on preference shares
|
224,000
|
|
Preference shares
|
600,000
|
|
Additional paid in capital from treasury shares
|
8,000
|
|
Unrealized decrease in the value of securities available for sale
|
6,000
|
|
Ordinary share warrants outstanding
|
40,000
|
|
Translation reserves, debit
|
100,000
|
Additional information:
a. Ordinary shares is no-par, with stated value of P20 per share, 90,000 shares are authorized, 40,000 shares are issued and outstanding. 5,000 shares have been subscribed at a price of P56 per share. 25% of the total ordinary shares subscription are still outstanding as of the year end and are expected to be collected within the subsequent quarter.
b.
c. The subscriptions transactions both for the ordinary shares and preference shares are yet to be recorded.
d. Bonds payable mature on July 1, 2024. These bonds carry a 12% annual interest rate, payable semiannually. The premium is being amortized using the straight-line method.
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