Required information [The following information applies to the questions displayed below.] Lansing Company's current-year income statement and selected balance sheet data at December 31 of the current and prior years follow. LANSING COMPANY Income Statement For Current Year Ended December 31 Sales revenue Expenses Cost of goods sold Depreciation expense Salaries expense Rent expense Insurance expense Interest expense Utilities expense Net income At December 31 $ 127,200 LANSING COMPANY Selected Balance Sheet Accounts Accounts receivable Inventory Accounts payable Salaries payable Utilities payable Prepaid insurance Prepaid rent 52,000 17,000 28,000 10,000 4,800 4,600 3,800 $ 7,000 Current Year $ 6,600 2,980 5,400 1,080 420 360 420 Prior Year $ 7,800 2,040 6,600 800 260 480 280
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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Required information
[The following information applies to the questions displayed below.]
10
Q
A
Expenses
prior years follow.
Lansing Company's current-year income statement and selected balance sheet data at December 31 of the current and
S (2
LANSING COMPANY
Income Statement
For Current Year Ended December 31
Sales revenue
Cost of goods sold
Depreciation expense
Salaries expense
Rent expense
Insurance expense
Interest expense
Utilities expense
Net income
2
2
At December 31
Accounts receivable
Inventory
Accounts payable
Salaries payable
SOF
Utilities payable
Prepaid insurance
Prepaid rent
W
S
#
Window Help
3
LANSING COMPANY
Selected Balance Sheet Accounts
20
F3
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E
D
$
4
$ 127,200
Current Year
$ 6,600
2,980
5,400
1,080
OOD
DOD
F4
52,000
17,000
28,000
10,000
R
4,800
4,600
3,800
$ 7,000
F
420
360
420
%
15
Prior Year
$ 7,800
2,040
6,600
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F5
T
800
260
480
280
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