Q No.3 The trial balance of Cohen Construction Co. at June 30, 20X3, follows. COHEN CONSTRUCTION CO. Trial Balance June 30, 20X3 Cash 21,000 Accounts receivable 37,820 Supplies 17,660 Prepaid insurance 2,300 Equipment 32,690 Accumulated depreciation - equipment 26,240 Building 42,890 Accumulated depreciation - building 10,500 Land 28,300 Accounts payable 22,690 Interest payable Wage payable Unearned service revenue 10,560 Note payable, long-term 22,400 Lynn Cohen, capital 79,130 Lynn Cohen, withdrawals 4,200 4,200 Service revenue 20,190 Depreciation expense - equipment Depreciation expense - building Wage expense 3,200 Insurance expense Interest expense Utilities expense 1,110 Advertising expense 340 Supplies expense 191,710 191,710 Additional data at June 30, 20X3: Depreciation: equipment, Rs.630; building, Rs.370. Accrued wage expense, Rs.240. Supplies on hand, Rs.14,370 Prepaid insurance expired during June, Rs.500. Accrued interest expense, Rs.180. Unearned service revenue earned during June, Rs.4,970. Accrued advertising expense, Rs.100 (credit Accounts Payable). Accrued service revenue, Rs.1,100. Required Prepare Income Statement
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.
Q No.3 The
| COHEN CONSTRUCTION CO. | ||
| Trial Balance | ||
| June 30, 20X3 | ||
| Cash | 21,000 | |
| Accounts receivable | 37,820 | |
| Supplies | 17,660 | |
| Prepaid insurance | 2,300 | |
| Equipment | 32,690 | |
| Accumulated |
26,240 | |
| Building | 42,890 | |
| Accumulated depreciation - building | 10,500 | |
| Land | 28,300 | |
| Accounts payable | 22,690 | |
| Interest payable | ||
| Wage payable | ||
| Unearned service revenue | 10,560 | |
| Note payable, long-term | 22,400 | |
| Lynn Cohen, capital | 79,130 | |
| Lynn Cohen, withdrawals 4,200 | 4,200 | |
| Service revenue | 20,190 | |
| Depreciation expense - equipment | ||
| Depreciation expense - building | ||
| Wage expense | 3,200 | |
| Insurance expense | ||
| Interest expense | ||
| Utilities expense | 1,110 | |
| Advertising expense | 340 | |
| Supplies expense | ||
| 191,710 | 191,710 |
Additional data at June 30, 20X3:
- Depreciation: equipment, Rs.630; building, Rs.370.
- Accrued wage expense, Rs.240.
- Supplies on hand, Rs.14,370
- Prepaid insurance expired during June, Rs.500.
- Accrued interest expense, Rs.180.
- Unearned service revenue earned during June, Rs.4,970.
- Accrued advertising expense, Rs.100 (credit Accounts Payable).
- Accrued service revenue, Rs.1,100.
Required
- Prepare Income Statement
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