Given are the amounts of assets, liabilities, owner’s equity, revenues, andexpenses of AQUA Inc. at 12/31/10. The beginning amount of Retained Earnings at1/1/10 was $20,000, and during the year Dividends of $60,000 were taken out bythe owners of Aqua Inc. Prepare the yearend Balance Sheet and Income Statementfor AQUA LLP at the end of the year. (Include Correct Headings)Accounts Payable $59,000 Land $78,000Accounts Receivable 15,000 UnearnedRevenue 45,000Advertising Expense13,000 UtilitiesExpense5,000Building 160,000 Rent Expense 13,000Cash 140,000 OperatingExpenses 23,000Supplies 10,000 CommonStock 240,000 Salary payable2,000 AccumulatedDepreciation 10,000Prepaid Insurance Expense 20,000 ServiceRevenue 170,000Interest Expense9,000 Retained Earnings ?
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.
Given are the amounts of assets, liabilities, owner’s equity, revenues, and
expenses of AQUA Inc. at 12/31/10. The beginning amount of
1/1/10 was $20,000, and during the year Dividends of $60,000 were taken out by
the owners of Aqua Inc. Prepare the yearend
for AQUA LLP at the end of the year.
(Include Correct Headings)
Accounts Payable $59,000 Land $78,000
Revenue 45,000
Advertising Expense
13,000 Utilities
Expense
5,000
Building 160,000 Rent Expense 13,000
Cash 140,000 Operating
Expenses 23,000
Supplies 10,000 Common
Stock 240,000
Salary payable
2,000 Accumulated
Prepaid Insurance Expense 20,000 Service
Revenue 170,000
Interest Expense
9,000 Retained Earnings ?
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