Instructions: Using the following adjusted trial balance, complete the following for 2019: Use the Jaymie Corporation example in Chapter 3 for guidance. In the absence of other guidance, assume the circumstances for your project are similar to the example shown. 1) Income statement 2) Statement of shareholders' equity 3) Balance sheet 4) In place of completing a full statement of cash flows, review the Statement of Cash Flows within Example 3.9 in the text and advise an error (or at least a questionable treatment) of an item presented by the authors that you have discovered. Create the financial statements using Excel and submit for grading via the assignment in Blackboard. Add your answer to item 4) within the same Excel workbook clearly identified as the response to item 4). Grading will be based on accuracy and completeness with more weight given to completeness. Also, please consider the following. This is background information and should not be interpreted as changing any amounts shown on the adjusted trial balance. Note 1) This is a new corporation. 2019 is its first year of operations. Note 2) On 1/1 various shareholders invest by purchasing 2.000 shares of no-par stock at $10 per share Note 3) On 3/30, Jackie purchases a buidling and equipment for $15,320 and $2,120 respectively. Jackie pays $10,840 and signs a 12% note (interest and principal to be paid after 2 years) for the $6,600 balance. Note 4) 9/1 Jackie sells 1 acre of land (original cost $1,500) and receives a $1,320, 6-month, 15% note from buyer. Jackie Corporation Adjusted Trial Balance December 31, 2019 Debit Credit Cash 3,042 Accounts Receivable 5,000 Allowance for Doubtful Accounts 420 Notes Receivable 1,320 Interest Receivable 88 Inventory 2,960 Prepaid Insurance 150 Land 1,500 Building 15,320 Accumulated Depreciation: Building 320 Equipment 2,120 Accumulated Depreciation: Equipment 140 Accounts Payable 2,800 Notes Payable 6,600 Salaries Payable 1,200 Interest Payable 368 Income Taxes Payable 640 Unearned Rent 600 Common Stock 20,000 Retained Earnings - Dividends 1,650 Sales Revenue 18,690 Interest Income 164 Rent Income 300 Cost of Goods Sold 12,800 Salaries Expense 2,900 Other Expenses 412 Loss on Sale of Land 180 Depreciation Expense: Building 320 Depreciation Expense: Equipment 140 Bad Debts Expense 420 Insurance Expense 340 Interest Expense 680 Income Tax Expense 900 Totals 52,242 52,242 -
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.
| Instructions: Using the following adjusted |
||||||
| Use the Jaymie Corporation example in Chapter 3 for guidance. In the absence of other | ||||||
| guidance, assume the circumstances for your project are similar to the example shown. | ||||||
| 1) Income statement | ||||||
| 2) Statement of shareholders' equity | ||||||
| 3) |
||||||
| 4) In place of completing a full statement of cash flows, review the Statement of Cash Flows | ||||||
| within Example 3.9 in the text and advise an error (or at least a questionable treatment) | ||||||
| of an item presented by the authors that you have discovered. | ||||||
| Create the financial statements using Excel and submit for grading via the assignment | ||||||
| in Blackboard. Add your answer to item 4) within the same Excel workbook clearly | ||||||
| identified as the response to item 4). | ||||||
| Grading will be based on accuracy and completeness with more weight given to | ||||||
| completeness. | ||||||
| Also, please consider the following. This is background information and | ||||||
| should not be interpreted as changing any amounts shown on the | ||||||
| adjusted trial balance. | ||||||
| Note 1) This is a new corporation. 2019 is its first year of operations. | ||||||
| Note 2) On 1/1 various shareholders invest by purchasing 2.000 shares | ||||||
| of no-par stock at $10 per share | ||||||
| Note 3) On 3/30, Jackie purchases a buidling and equipment for $15,320 and $2,120 respectively. | ||||||
| Jackie pays $10,840 and signs a 12% note (interest and principal to be paid after 2 years) for | ||||||
| the $6,600 balance. | ||||||
| Note 4) 9/1 Jackie sells 1 acre of land (original cost $1,500) and receives a $1,320, 6-month, | ||||||
| 15% note from buyer. | ||||||
| Jackie Corporation | ||||||
| Adjusted Trial Balance | ||||||
| December 31, 2019 | ||||||
| Debit | Credit | |||||
| Cash | 3,042 | |||||
| 5,000 | ||||||
| Allowance for Doubtful Accounts | 420 | |||||
| Notes Receivable | 1,320 | |||||
| Interest Receivable | 88 | |||||
| Inventory | 2,960 | |||||
| Prepaid Insurance | 150 | |||||
| Land | 1,500 | |||||
| Building | 15,320 | |||||
| Accumulated |
320 | |||||
| Equipment | 2,120 | |||||
| Accumulated Depreciation: Equipment | 140 | |||||
| Accounts Payable | 2,800 | |||||
| Notes Payable | 6,600 | |||||
| Salaries Payable | 1,200 | |||||
| Interest Payable | 368 | |||||
| Income Taxes Payable | 640 | |||||
| Unearned Rent | 600 | |||||
| Common Stock | 20,000 | |||||
| - | ||||||
| Dividends | 1,650 | |||||
| Sales Revenue | 18,690 | |||||
| Interest Income | 164 | |||||
| Rent Income | 300 | |||||
| Cost of Goods Sold | 12,800 | |||||
| Salaries Expense | 2,900 | |||||
| Other Expenses | 412 | |||||
| Loss on Sale of Land | 180 | |||||
| Depreciation Expense: Building | 320 | |||||
| Depreciation Expense: Equipment | 140 | |||||
| 420 | ||||||
| Insurance Expense | 340 | |||||
| Interest Expense | 680 | |||||
| Income Tax Expense | 900 | |||||
| Totals | 52,242 | 52,242 | - |
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