Cornhusker Company provides the following information at the end of 2021.Cash remaining $ 4,800Rent expense for the year 7,000Land that has been purchased 21,000Retained earnings 12,400Utility expense for the year 4,900Accounts receivable from customers 7,200Service revenue recognized during the year 37,000Salary expense for the year 13,300Accounts payable to suppliers 2,200Dividends paid to shareholders during the year 3,200Common stock that has been issued prior to 2021 16,000Salaries owed at the end of the year 2,400Insurance expense for the year 3,500Retained earnings at the beginning of the year 7,300Required:Prepare the income statement, statement of stockholders’ equity, and balance sheet for Cornhusker Company on December 31, 2021. No common stock is issued during 2021.
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.
Cornhusker Company provides the following information at the end of 2021.
Cash remaining $ 4,800
Rent expense for the year 7,000
Land that has been purchased 21,000
Retained earnings 12,400
Utility expense for the year 4,900
Accounts receivable from customers 7,200
Service revenue recognized during the year 37,000
Salary expense for the year 13,300
Accounts payable to suppliers 2,200
Dividends paid to shareholders during the year 3,200
Common stock that has been issued prior to 2021 16,000
Salaries owed at the end of the year 2,400
Insurance expense for the year 3,500
Retained earnings at the beginning of the year 7,300
Required:
Prepare the income statement, statement of
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