1. Presented below is the adjusted trial balance of the LLL Corporation. Using this data, prepare the following statements: Income Statement (multiple step format); be sure to include the required earnings per share presentation. b. Statement of Retained Earnings c. Balance Sheet (classified format) a. LLL Corporation Adjusted Trial Balance 31-Dec-20 Debit Credit Cash 104,000 Accounts Receivable 294,000 Allowance for Doubtful Accounts 22,000 Notes Receivable (due 2/25/21) 2,500 259,500 325,000 Inventory, 12/31/17 Equipment Accumulated Depreciation - Equipment Building Accumulated Depreciation - Building 115,000 531,000 166,000 Land 125,000 Accounts Payable 136,000 Salaries & Wages Payable 6,000 Notes Payable - Due 5/31/21 125,000 395,000 Mortgage Payable - Due 12/31/2035 Common Stock, Par $.01 10,000 Additional Paid in Capital in Excess of Par 400,000 Retained Earnings, 12/31/20 179,000 Dividends Declared 15,000 885,000 Sales, Net Cost of Goods Sold (COGS) 475,000 165,000 Selling Expenses Administrative Expenses 125,000 16,000 10,000 Dividend & Interest Revenue Gain on Sale of Land Income Tax Expense 44,000 2,465,000 2,465,000
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.
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