Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows: 1. Journalize the selected transactions. If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Issued 15,000 shares of $20 par common stock at $30, receiving cash. Description Debit Credit b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash. Description Debit Credit c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually. Description Debit Credit d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on preferred stock. On the date of record, 100,000 shares of common stock were outstanding, no treasury shares were held, and 20,000 shares of preferred stock were outstanding. Journalize the common stock and the preferred stock entries separately. Description Debit Credit Common stock Preferred stock e. Paid the cash dividends declared in (d). Description Debit Credit f. Purchased 8,000 shares of treasury common stock at $33 per share. Description Debit Credit g. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued. Description Debit Credit h. Paid the cash dividends to the preferred stockholders. Description Debit Credit i. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (f). Description Debit Credit j. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method. Description Debit Credit
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.
Comprehensive Problem 4
Part 1:
Selected transactions completed by Equinox Products Inc. during the fiscal year ended December 31, 20Y8, were as follows:
1. Journalize the selected transactions.
If no entry is required, select "No entry required" from the dropdown and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.
a. Issued 15,000 shares of $20 par common stock at $30, receiving cash.
| Description | Debit | Credit |
|---|---|---|
b. Issued 4,000 shares of $80 par preferred 5% stock at $100, receiving cash.
| Description | Debit | Credit |
|---|---|---|
c. Issued $500,000 of 10-year, 5% bonds at 104, with interest payable semiannually.
| Description | Debit | Credit |
|---|---|---|
d. Declared a quarterly dividend of $0.50 per share on common stock and $1.00 per share on
| Description | Debit | Credit |
|---|---|---|
| Common stock | ||
| Preferred stock |
e. Paid the cash dividends declared in (d).
| Description | Debit | Credit |
|---|---|---|
f. Purchased 8,000 shares of
| Description | Debit | Credit |
|---|---|---|
g. Declared a $1.00 quarterly cash dividend per share on preferred stock. On the date of record, 20,000 shares of preferred stock had been issued.
| Description | Debit | Credit |
|---|---|---|
h. Paid the cash dividends to the preferred stockholders.
| Description | Debit | Credit |
|---|---|---|
i. Sold, at $38 per share, 2,600 shares of treasury common stock purchased in (f).
| Description | Debit | Credit |
|---|---|---|
j. Recorded the payment of semiannual interest on the bonds issued in (c) and the amortization of the premium for six months. The amortization is determined using the straight-line method.
| Description | Debit | Credit |
|---|---|---|
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