Using the following information, prepare a statement of owner's equity for the month of October for Ann's Cupcakes. A. Gordon, Capital, on October 1 $15,750 Additional investment by A. Gordon on October 20 4,250 Net loss for the month (from income statement) 700 Total withdrawals for the month 2,100 Ann's Cupcakes Statement of Owner's Equity For Month Ended October 31, 20-- $fill in the blank 94b1cefe505efe7_2 fill in the blank 94b1cefe505efe7_4 Total Investment $fill in the blank 94b1cefe505efe7_5 $fill in the blank 94b1cefe505efe7_7 fill in the blank 94b1cefe505efe7_9 fill in the blank 94b1cefe505efe7_11 $fill in the blank 94b1cefe505efe7_13
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.
| Using the following information, prepare a statement of owner's equity for the month of October for Ann's Cupcakes. | |||||||||||
|
| Ann's Cupcakes | ||
| Statement of Owner's Equity | ||
| For Month Ended October 31, 20-- | ||
| $fill in the blank 94b1cefe505efe7_2 | ||
| fill in the blank 94b1cefe505efe7_4 | ||
| Total Investment | $fill in the blank 94b1cefe505efe7_5 | |
| $fill in the blank 94b1cefe505efe7_7 | ||
| fill in the blank 94b1cefe505efe7_9 | ||
| fill in the blank 94b1cefe505efe7_11 | ||
| $fill in the blank 94b1cefe505efe7_13 |
Statement of Owners' Equity:
It is also known as the Statement of Changes in equity or Statement of Retained Earnings. It is one of the main four financial statements. Statement of Retained Earnings provides details of movement in owners' equity over a specific period. The movement is derived from the net income or loss, changes in share capital, dividends, gains, or loss reported to equity.
The movement in the statement of owners' equity includes the net income earned or net loss incurred during the year, dividends paid, additional capital invested, the amount borrowed for personal use, etc.
Now, let us look into the problem, and prepare the statement as required.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
