Labyrinth Services Co. Balance Sheet For the Year Ended August 31, 2019 1 Assets 2 Current assets: 3 Cash $18,500.00 4 Accounts payable 31,300.00 5 Supplies 6,500.00 6 Prepaid insurance 16,600.00 7 Land 225,000.00 8 Total current assets $297,900.00 9 Property, plant, and equipment: 10 Building $400,000.00 11 Equipment 97,000.00 12 Total property, plant, and equipment 635,400.00 13 Total assets $933,300.00 14 Liabilities 15 Current liabilities: 16 Accounts receivable $41,400.00 17 Accum. depr.—building 155,000.00 18 Accum. depr.—equipment 25,000.00 19 Net income 118,200.00 20 Total liabilities $339,600.00 21 Owner’s Equity 22 Wages payable $6,500.00 23 Ruben Daniel, capital 587,200.00 24 Total owner’s equity 593,700.00 25 Total liabilities and owner’s equity $933,300.00 Prepare a corrected balance sheet. List Property, plant, and equipment in the order of Land, Building & Equipment. Refer to the account names in the instructions and the lists of Labels and Amount Descriptions for the exact wording of text entries. Be sure to complete the statement heading.
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.
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Labyrinth Services Co.
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Balance Sheet
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For the Year Ended August 31, 2019
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1
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Assets
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2
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Current assets:
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3
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Cash
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$18,500.00
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4
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Accounts payable
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31,300.00
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5
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Supplies
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6,500.00
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6
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Prepaid insurance
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16,600.00
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7
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Land
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225,000.00
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8
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Total current assets
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$297,900.00
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9
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Property, plant, and equipment:
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10
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Building
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$400,000.00
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11
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Equipment
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97,000.00
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12
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Total property, plant, and equipment
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635,400.00
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13
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Total assets
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$933,300.00
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14
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Liabilities
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15
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Current liabilities:
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16
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Accounts receivable
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$41,400.00
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17
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Accum. depr.—building
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155,000.00
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18
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Accum. depr.—equipment
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25,000.00
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19
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Net income
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118,200.00
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20
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Total liabilities
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$339,600.00
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21
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Owner’s Equity
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22
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Wages payable
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$6,500.00
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23
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Ruben Daniel, capital
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587,200.00
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24
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Total owner’s equity
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593,700.00
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25
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Total liabilities and owner’s equity
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$933,300.00
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