These financial statement items are for Wildhorse Company at year-end, July 31, 2022. Salaries and wages payable $1,500 Notes payable (due after 2023) $2,000 Salaries and wages expense 51,300 Cash 14,100 Utilities expense 22,900 Accounts receivable 9,300 Equipment 30,900 Accumulated depreciation―equipment 5,500 Accounts payable 4,900 Owner’s drawings 3,400 Service revenue 63,400 Depreciation expense 4,100 Rent revenue 8,000 Owner’s capital (beginning of the year) 50,700 Prepare an income statement, an owner's equity statement, and a classified balance sheet for the year.
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.
These financial statement items are for Wildhorse Company at year-end, July 31, 2022.
|
Salaries and wages payable
|
$1,500 |
Notes payable (due after 2023)
|
$2,000 | |||
|---|---|---|---|---|---|---|
|
Salaries and wages expense
|
51,300 |
Cash
|
14,100 | |||
|
Utilities expense
|
22,900 |
|
9,300 | |||
|
Equipment
|
30,900 |
|
5,500 | |||
|
Accounts payable
|
4,900 |
Owner’s drawings
|
3,400 | |||
|
Service revenue
|
63,400 |
Depreciation expense
|
4,100 | |||
|
Rent revenue
|
8,000 |
Owner’s capital (beginning of the year)
|
50,700 |
Prepare an income statement, an owner's equity statement, and a classified
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