The work sheet for Babson's Seafood, a business owned by B. B. Babson, is provided. Year-end adjustments have been made and all required entries journalized and posted to the ledger accounts. Babson's Seafood Work Sheet (partial) For the year ended December 31, 20- TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Cash 60,000 60,000 60.000 Accounts Receivable 36,000 36,000 36.000 Merchandise Inventory 50,000 60,000 50,000 60,000 60,000 Supplies 23,200 16.000 7.200 7.200 Prepaid Insurance 9.000 4,000 5.000 5.000 Building 107.000 107.000 107,000 Accumulated Depreciation-Building 30.000 7.000 7,000ב 37.000 Equipment 70.000 70.000 70.000 Accumulated Depreciation-Equipment 28.000 6.000 34,000 34,000 Accounts Payable 32.200 32.200 32,200 Wages Payable 1.100 1.100 1.100 Unearned Revenue 16.000 11.000 5,000 5,000 Mortgage Payable 107.000 107,000 107,000 B. B. Babson, Capital 110,500 110,500 110,500 B. B. Babson, Drawing 40,000 40,000 40,000 Income Summary 50,000 60,000 50.000 60,000 50,000 60.000 Sales 228.000 228.000 228.000 Sales Returns and Allowances 3.500 3.500 3.500 Earned Revenue 11.000 11.000 11.000 Purchases 54,000 54,000 54,000 Purchases Returns and Allowances 6,400 6,400 6,400 Wages Expense 78.000 1,100 79.100 79.100 Supplies Expense 16,000 16.000 16,000 Depreciation Expense-Building 7,000 7,000 7,000 Depreciation Expense-Equipment 6,000 6,000 6,000 Insurance Expense 4,000 4,000 4,000 Utilities Expense 20.000 20.000 20.000 Miscellaneous Expense 7,400 7,400 7,400 558,100 558,100 155,100 155,100 632.200 632.200 247,000 305,400 385.200 326.800 Net Income 58,400 58,400 305,400 305,400 385,200 385,200 Required:
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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