Finders Investigative Services is an investigative services firm that is owned and operated by Stacy Tanner. On June 30, 2019, the end of the fiscal year, the accountant for Finders Investigative Services prepared an end-of-period spreadsheet, a part of which follows: Finders Investigative Services End-of-Period Spreadsheet For the Year Ended June 30, 2019 ~ Adjusted Trial Balance Account Title ~ Dr. Cr. ~ Cash ~ 28,000 Accounts Receivable ~ 69,600 Supplies ~ 4,600 Prepaid Insurance ~ 2,500 Building ~ 439,500 Accumulated Depreciation-Building ~ 44,200 Accounts Payable ~ 11,700 Salaries Payable ~ 3,000 Unearned Rent ~ 2,000 Stacy Tanner, Capital ~ 373,800 Stacy Tanner, Drawing ~ 12,000 Service Fees ~ 718,000 Rent Revenue ~ 12,000 Salaries Expense ~ 522,100 Rent Expense ~ 48,000 Supplies Expense ~ 10,800 Depreciation Expense-Building ~ 8,750 Utilities Expense ~ 7,150 Repairs Expense ~ 3,000 Insurance Expense ~ 2,500 Miscellaneous Expense ~ 6,200 ~ 1,164,700 1,164,700 Required: 1. Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.* 2. Journalize the entries that were required to close the accounts at June 30.* 3. If Stacy Tanner, Capital has instead decreased $30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss? *Be sure to read the instructions for each financial statement carefully. Refer to the chart of accounts and the list of Labels and Amount Descriptions provided for the exact wording of the answer choices for text entries.
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.
| Finders Investigative Services | |||
| End-of-Period Spreadsheet | |||
| For the Year Ended June 30, 2019 | |||
| ~ | Adjusted |
||
| Account Title | ~ | Dr. | Cr. |
| ~ | |||
| Cash | ~ | 28,000 | |
| Accounts Receivable | ~ | 69,600 | |
| Supplies | ~ | 4,600 | |
| Prepaid Insurance | ~ | 2,500 | |
| Building | ~ | 439,500 | |
| ~ | 44,200 | ||
| Accounts Payable | ~ | 11,700 | |
| Salaries Payable | ~ | 3,000 | |
| Unearned Rent | ~ | 2,000 | |
| Stacy Tanner, Capital | ~ | 373,800 | |
| Stacy Tanner, Drawing | ~ | 12,000 | |
| Service Fees | ~ | 718,000 | |
| Rent Revenue | ~ | 12,000 | |
| Salaries Expense | ~ | 522,100 | |
| Rent Expense | ~ | 48,000 | |
| Supplies Expense | ~ | 10,800 | |
| Depreciation Expense-Building | ~ | 8,750 | |
| Utilities Expense | ~ | 7,150 | |
| Repairs Expense | ~ | 3,000 | |
| Insurance Expense | ~ | 2,500 | |
| Miscellaneous Expense | ~ | 6,200 | |
| ~ | 1,164,700 | 1,164,700 |
| Required: | |||
| 1. | Prepare an income statement, a statement of owner’s equity (no additional investments were made during the year), and a balance sheet.* | ||
| 2. | |||
| 3. | If Stacy Tanner, Capital has instead decreased $30,000 after the closing entries were posted, and the withdrawals remained the same, what would have been the amount of net income or net loss?
|
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 5 images
