Alec Bohm is the owner of Alec Bohm Baseball Bats, Inc (ABBBI). ABBBI uses a periodic inventory system to determine cost of goods sold and ending inventory balances at the end of each accounting period. ABBBI produces many different models of baseball bats, but its best selling product is its "Pro Model" maple bat. ABBBI's accounting records provided the following information regarding the "Pro Model" bat at the end of the accounting period, October 31. The "Pro Model" bat sells for $12 per unit. Transactions Inventory, October 1 Sale, October 13 Purchase, October 16 Sale, October 21 Purchase, October 26 Unit Cost $4.00 4.50 5.50 a Weighted average cost b. First-in, first-out cLast-in, first-out d. Specific identification Units 190 (170) 240 (110) 70 Total Cost $760 1,080 385 For the Specific identification method, ABBBI took the units from the October 13 sale out of its beginning inventory, and the units from the October 21 sale were taken from the October 16 purchase. Required: 1. Compute ABBBI's cost of goods available for sale, ending inventory, and cost of goods sold at October 31 under each of the following inventory costing methods: (Round your intermediate calculations to 2 decimal places and final answers to the nearest dollar amount.) Cost of Goods Available for Sale Ending Inventory Cost of Goods Sold
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.
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