The following balances were taken from the books of Schimank Corp. on December 31, 2014. Interest revenue $1,20,400 Accumulated depreciation-equipment $56,000 Cash 71,400 Accumulated depreciation-building 39,200 Sales 19,32,000 Notes receivable 2,17,000 Accounts receivable 2,10,000 Selling expenses 2,71,600 Prepaid insurance 28,000 Accounts payable 2,38,000 Sales returns and allowances 2,10,000 Bonds payable 1,40,000 Allowance for doubtful accounts 9,800 Administrative and general expenses 1,35,800 Sales discounts 63,000 Accrued liabilities 44,800 Land 1,40,000 Interest expense 84,000 Equipment 2,80,000 Notes payable 1,40,000 Building 1,96,000 Loss from earthquake damage (extraordinary item) 2,10,000 Cost of goods sold 8,69,400 Common stock 7,00,000 Retained earnings 29,400 Assume the total effective tax rate on all items is 34%. Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.
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 following balances were taken from the books of Schimank Corp. on December 31, 2014.
Interest revenue $1,20,400 Accumulated
Cash 71,400 Accumulated depreciation-building 39,200
Sales 19,32,000 Notes receivable 2,17,000
Prepaid insurance 28,000 Accounts payable 2,38,000
Sales returns and allowances 2,10,000 Bonds payable 1,40,000
Allowance for doubtful accounts 9,800 Administrative and general expenses 1,35,800
Sales discounts 63,000 Accrued liabilities 44,800
Land 1,40,000 Interest expense 84,000
Equipment 2,80,000 Notes payable 1,40,000
Building 1,96,000 Loss from earthquake damage (extraordinary item) 2,10,000
Cost of goods sold 8,69,400 Common stock 7,00,000
Assume the total effective tax rate on all items is 34%.
Prepare a multiple-step income statement; 100,000 shares of common stock were outstanding during the year.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
