The individual financial statements for these two companies for the year ending December 31, 2021, are as follows: Lisa Company Mona, Inc. $ $ (250,000) 145,000 Sales and other revenues (550,000) 245,000 (28,000) (19,800) Expenses Dividend income-Lisa common stock Dividend income-Lisa preferred stock Net income 24 (352,800) 2$ (105,000) (725,000) (352,800) 117,800 (550,000) (105,000) 35,000 33,000 Retained earnings, 1/1/21 Net income (above) 2$ Dividends declared-common stock Dividends declared-preferred stock Retained earnings, 12/31/21 2$ (960,000) $ (587,000) Current assets 2$ 155,419 596,000 90,000 51,833 1,125,000 (325,000) 24 525,000 Investment in Lisa-common stock Investment in Lisa-preferred stock Investment in Lisa-bonds Fixed assets 825,000 Accumulated depreciation (225,000) $ 1,125,000 Total assets $ 1,693,252 Accounts payable Bonds payable Discount on bonds payable Common stock Preferred stock (408,252) (91,472) (100,000) 3,472 (225,000) (125,000) (587,000) 2$ $ (325,000) Retained earnings, 12/31/21 (960,000) Total liabilities and equities $(1,693,252) $(1,125,000) Note: Credits are indicated by parentheses. a. What consolidation worksheet adjustments would have been required as of January 1, 2020, to eliminate the subsidiary's common and preferred stocks? b. What consolidation worksheet adjustments would have been required as of December 31, 2020, to account for Mona's purchase of Lisa's bonds? c. What consolidation worksheet adjustments would have been required as of December 31, 2020, to account for the intra-entity sale of fixed assets? d. Assume that consolidated financial statements are being prepared for the year ending December 31, 2021. Calculate the consolidated balance for each of the following accounts: Franchises Fixed Assets Accumulated Depreciation Expenses
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.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
