What are the income statement, balance sheet, and closing entries for revenue and expense for Dynamite Fireworks? The general journal, adjusted trial balance has been answered. On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances: Accounts Debit Credit Cash $23,800 Accounts Receivable 5,200 Supplies 3,100 Land 50,000 Accounts Payable $ 3,200 Common Stock 65,000 Retained Earnings 13,900 Totals $82,100 $82,100 During January 2021, the following transactions occur: January 2 Purchase rental space for one year in advance, $6,000 ($500/month). January 9 Purchase additional supplies on account, $3,500 January 13 Provide services to customers on account, $25,500. January 17 Receive cash in advance from customers for services to be provided in the future, $3,700. January 20 Pay cash for salaries, $11,500. January 22 Receive cash on accounts receivable, $24,100. January 29 Pay cash on accounts payable, $4,000.
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.
What are the income statement, balance sheet, and closing entries for revenue and expense for Dynamite Fireworks? The general journal, adjusted
On January 1, 2021, the general ledger of Dynamite Fireworks includes the following account balances:
Accounts Debit Credit
Cash $23,800
Supplies 3,100
Land 50,000
Accounts Payable $ 3,200
Common Stock 65,000
Retained Earnings 13,900
Totals $82,100 $82,100
During January 2021, the following transactions occur:
January 2 Purchase rental space for one year in advance, $6,000 ($500/month).
January 9 Purchase additional supplies on account, $3,500
January 13 Provide services to customers on account, $25,500.
January 17 Receive cash in advance from customers for services to be provided in the future, $3,700.
January 20 Pay cash for salaries, $11,500.
January 22 Receive cash on accounts receivable, $24,100.
January 29 Pay cash on accounts payable, $4,000.
Financial statement: Financial statements are organized summaries of detailed information about the financial position and performance of an enterprise for a particular period. Financial statements are also called financial reports. Financial statement includes
- Balance sheet (Statement of Financial period).
- Statement of profit and loss. (Income statement).
- Retained earnings statement.
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