The company entered into the following transactions during the year. Jan. 15 Issued 5,000 shares of $1 par common stock for $50,000 cash. Jan. 31 Collected $3,000 from customers on account. Feb. 15 Reacquired 3,000 shares of $1 par common stock into treasury for $33,000 cash. Mar. 15 Reissued 2,000 shares of treasury stock for $24,000 cash. Aug. 15 Reissued 600 shares of treasury stock for $4,600 cash. Sept. 15 Declared (but did not yet pay) a $1 cash dividend on each outstanding share of common stock. Oct. 1 Issued 100, 10-year, $1,000 bonds, at a quoted bond price of 101. Oct. 3 Wrote off a $2,000 balance due from a customer who went bankrupt. Dec. 29 Recorded $230,000 of service revenue, all of which was collected in cash. Dec. 30 Paid $200,000 cash for this year’s wages through December 31. Ignore payroll taxes and payroll deductions. Dec. 31 Calculated $10,000 of depreciation for the year to be recorded. (Ignore accrual adjustments for interest and income taxes.) 1) Prepare the journal entries to record each transaction. Review the accounts as shown in the General Ledger and Trial Balance tabs. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) 2) Each journal entry is posted automatically to the general ledger. (see image below) 3) Use the dropdowns to select the accounts properly included on the classified balance sheet. However, you will need to enter the amount of Retained earnings. At the end of the year, the adjusted net income was $20,000. 4)Calculate the Debt to Assets Ratio and analyze the impact of the Debt to Assets Ratio.
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.
The company entered into the following transactions during the year.
| Jan. | 15 | Issued 5,000 shares of $1 par common stock for $50,000 cash. | ||
| Jan. | 31 | Collected $3,000 from customers on account. | ||
| Feb. | 15 | Reacquired 3,000 shares of $1 par common stock into treasury for $33,000 cash. | ||
| Mar. | 15 | Reissued 2,000 shares of |
||
| Aug. | 15 | Reissued 600 shares of treasury stock for $4,600 cash. | ||
| Sept. | 15 | Declared (but did not yet pay) a $1 cash dividend on each outstanding share of common stock. | ||
| Oct. | 1 | Issued 100, 10-year, $1,000 bonds, at a quoted |
||
| Oct. | 3 | Wrote off a $2,000 balance due from a customer who went bankrupt. | ||
| Dec. | 29 | Recorded $230,000 of service revenue, all of which was collected in cash. | ||
| Dec. | 30 | Paid $200,000 cash for this year’s wages through December 31. Ignore payroll taxes and payroll deductions. | ||
| Dec. | 31 | Calculated $10,000 of |
1) Prepare the journal entries to record each transaction. Review the accounts as shown in the General Ledger and
3) Use the dropdowns to select the accounts properly included on the classified balance sheet. However, you will need to enter the amount of
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