anvas student center C Chegg me MyEducator - BU... v Problem i H & H Tool Income Statement For the Year Ended December 31, 2023 Operating revenues: Operating expenses: Total operating expenses Other item: Net income Earnings per share 28 $ 0 0 0 0 One.IU | All IU Ca. Prev Save 1 of
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.
Brothers Herm and Steve Hargenrater began operations of their tool and die shop (H & H Tool) on January 1, 1987, in Meadville, PA. The annual reporting period ends December 31. Assume that the
| H & H Tool Trial Balance on January 1, 2023 (dollars in millions, except par value) |
||
| Debit | Credit | |
|---|---|---|
| Cash | 9 | |
| 8 | ||
| Supplies | 31 | |
| Land | ||
| Equipment | 98 | |
| 17 | ||
| Other noncurrent assets (not detailed to simplify) | 12 | |
| Accounts payable | ||
| Wages payable | ||
| Interest payable | ||
| Dividends payable | ||
| Income taxes payable | ||
| Long-term notes payable | ||
| Common stock (8 million shares, $0.50 par value) | 5 | |
| Additional paid-in capital | 100 | |
| 36 | ||
| Service revenue | ||
| Depreciation expense | ||
| Supplies expense | ||
| Wages expense | ||
| Interest expense | ||
| Income tax expense | ||
| Miscellaneous expenses (not detailed to simplify) | ||
| Totals | 158 | 158 |
Transactions during 2023 follow. All dollars are in millions, except per share amounts:
- Borrowed $24 cash on a 5-year, 10 percent note payable, dated March 1, 2023.
- Sold 6 million additional shares of common stock for cash at $1 market value per share on January 1, 2023.
- Purchased land for a future building site; paid cash, $23.
- Earned $339 in revenues for 2023, including $69 on credit and the rest in cash.
- Incurred $109 in wages expense and $45 in miscellaneous expenses for 2023, with $40 on credit and the rest paid in cash.
- Collected accounts receivable, $44.
- Purchased other noncurrent assets, $18 cash.
- Purchased supplies on account for future use, $43.
- Paid accounts payable, $42.
- Declared cash dividends on December 1, $24.
- Signed a three-year $49 service contract to start February 1, 2024.
- Paid the dividends in (j) on December 31.
Data for
- Supplies counted on December 31, 2023, $34.
- Depreciation for the year on the equipment, $19.
- Interest accrued on notes payable (to be computed).
- Wages earned by employees since the December 24 payroll but not yet paid, $21.
- Income tax expense, $18, payable in 2024
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