Prepare an income statement for the year ended December 31, 20Y5
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.
- Prepare an income statement for the year ended December 31, 20Y5
![PR 4-1A Financial statements and closing entries
Obj. 1, 2, 3
Beacons Company maintains and repairs warning lights, such as those found on radio towers and
lighthouses. Beacons Company prepared the following end-of-period spreadsheet at December 31,
20Y5, the end of the fiscal year:
A
1
2
3
4
6 Account Title
8 Cash
9 Accounts Receivable
10 Prepaid Insurance
11 Supplies
12 Land
13 Building
14 Accum. Dept-Building
15 Equipment
16 Accum. Dept-Equipment
17 Accounts Payable
B C
Beacons Company
End-of-Period Spreadsheet
For the Year Ended December 31, 2015
Unadjusted
Adjustments
Dr.
18 Salaries & Wages Payable
19 Uneamed Rent
20 Common Stock
21 Retained Earnings
22 Dividends
23 Fees Eamed
24 Rent Revenue
25 Salaries & Wages Expense
25 Advertising Expense
27 Utilities Expense
28 Depr. Exp-Building
29 Repairs Expense
30 Depr. Exp-Equipment
31 Insurance Expense
32 Supplies Expense
33 Misc. Expense
34
35
Trial Balance
Dr.
Cr.
10,800
38.900
4.200
2.730
98.000
400.000
101,000
10,000
158,100
21,700
16,400
8.850
205.300
85,100
15,700
D E F G
2,100
75.000
128,100
363.700
9,100
1,100
5.000
12.000
4.800
3,150
2180
Cr.
3,150
2,180
12,000
4,800
5,000
9,100
1,100
Adjusted
Trial Balance
Dr.
Cr.
10,800
48,000
1,050
550
98,000
400,000
101,000
10,000
163,100
21,700
16,400
12,000
8,850
217,300
89,900
15,700
5,000
1,000
75,000
128,100
372,800
1,100
4,800
3,150
2,180
4.320
4,320
875.000 875.000 37.330 37.330 905,900 905.900
Instructions
1. Prepare an income statement for the year ended December 31, 2015.
2. Prepare a statement of stockholders' equity for the year ended December 31, 20Y5. During the
year, common stock of $25,000 was issued.
3. Prepare a balance sheet as of December 31, 2015.
4. Based upon the end-of-period spreadsheet, journalize the closing entries.
5. Prepare a post-closing trial balance.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7369a2b9-2550-45e0-8d04-b50e4f371696%2F900f3278-9b48-41b6-85ed-c6bdcddf37b1%2Fy217ic_processed.jpeg&w=3840&q=75)
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