Prepare the financial statements Entertainment Centre Ltd. reported the following data at March 31, 2017, with amounts adapted and in thousands: Retained Earnings, March 31, 2017: $1,300 Accounts Receivable: $27,700 Net Revenues: $174,500 Total Current Liabilites: $53,600 All other expenses: $45,000 Other current assets: $4,800 Other assets: $24,300 Cost of goods sold: $128,000 Cash: $900 Property equipment, net: $7,200 Share Capital: $26,000 Inventories: $33,000 Long-term Liabilites: $13,500 Dividends: $0. You are the CFO responsible for reporting Entertainment Centre Ltd. results. Use these data to prepare an income statement for the year ended March 31, 2017, the statement of retained earnings for the year ended March 31, 2017 and the classified balance sheet at March 31, 2017. Use the report format for the balance sheet. Draw arrows linking the three statements to explain the information flows between the statements. Prepare the closing entries Use the Entertainment Centre Ltd. data given above to make the company's closing entries at March 31, 2017. Then set-up a T-account for Retained earnings and post to that account. Compare the Retained Earnings' ending balance to the amount reported on Entertainment Centre Ltd.'s statement of retained earnings and balance sheet.
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.
Prepare the financial statements
Entertainment Centre Ltd. reported the following data at March 31, 2017, with amounts adapted and in thousands:
Net Revenues: $174,500
Total Current Liabilites: $53,600
All other expenses: $45,000
Other current assets: $4,800
Other assets: $24,300
Cost of goods sold: $128,000
Cash: $900
Property equipment, net: $7,200
Share Capital: $26,000
Inventories: $33,000
Long-term Liabilites: $13,500
Dividends: $0.
You are the CFO responsible for reporting Entertainment Centre Ltd. results. Use these data to prepare an income statement for the year ended March 31, 2017, the statement of retained earnings for the year ended March 31, 2017 and the classified balance sheet at March 31, 2017. Use the report format for the balance sheet. Draw arrows linking the three statements to explain the information flows between the statements.
Prepare the closing entries
Use the Entertainment Centre Ltd. data given above to make the company's closing entries at March 31, 2017. Then set-up a T-account for Retained earnings and post to that account. Compare the Retained Earnings' ending balance to the amount reported on Entertainment Centre Ltd.'s statement of retained earnings and balance sheet.
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