The condensed income statement and comparative balance sheet of Donald Corporation as of December 31, 2022 and 2021, are provided below. Other financial data is also given. DONALD CORPORATION Condensed Income Statement Year Ended December 31, 2022 Revenues $ 671,500 Costs and Expenses Cost of Goods Sold 428,600 Salaries Expense 124,600 Depreciation Expense 14,600 Advertising Expense 14,500 Utilities Expense 17,600 Total Costs and Expenses $ 599,900 Net Income Before Income Taxes 71,600 Income Taxes Expense 17,900 Net Income After Income Taxes $ 53,700 DONALD CORPORATION Comparative Balance Sheet December 31, 2022 and 2021 Assets 2022 2021 Cash $ 72,600 $ 67,000 Accounts Receivable (Net) 55,050 51,600 Merchandise Inventory 48,600 53,400 Prepaid Advertising 7,600 9,400 Property, Plant, and Equipment 120,000 96,000 Less: Accumulated Depreciation (24,200 ) (9,600 ) Total Assets $ 279,650 $ 267,800 Liabilities and Stockholders’ Equity Liabilities Accounts Payable 50,050 78,400 Salaries Payable 5,900 3,300 Unearned Revenues 3,800 6,400 Income Taxes Payable 8,100 4,600 Note Payable—2024 0 26,000 Total Liabilities $ 67,850 $ 118,700 Stockholders’ Equity Common Stock ($2 par) 67,000 46,000 Retained Earnings 144,800 103,100 Total Stockholders’ Equity $ 211,800 $ 149,100 Total Liabilities and Stockholders’ Equity $ 279,650 $ 267,800 Additional information for the year that is pertinent to its preparation follows. No items of property, plant, and equipment were disposed of during the year. Paid cash for the additions to property, plant, and equipment during the year. Paid $12,000 dividends on the common stock in cash during the year. Issued common stock at par value for cash. Paid cash to retire the long-term note payable. Required: Prepare a statement of cash flows for Donald Corporation for 2022. Analyze: If Donald Corporation had written off an uncollectible account receivable of $5,900 during this fiscal period, what adjustment, if any, would be required on the statement of cash flows?
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
The condensed income statement and comparative balance sheet of Donald Corporation as of December 31, 2022 and 2021, are provided below. Other financial data is also given.
| DONALD CORPORATION Condensed Income Statement Year Ended December 31, 2022 |
|||
| Revenues | $ | 671,500 | |
| Costs and Expenses | |||
| Cost of Goods Sold | 428,600 | ||
| Salaries Expense | 124,600 | ||
| 14,600 | |||
| Advertising Expense | 14,500 | ||
| Utilities Expense | 17,600 | ||
| Total Costs and Expenses | $ | 599,900 | |
| Net Income Before Income Taxes | 71,600 | ||
| Income Taxes Expense | 17,900 | ||
| Net Income After Income Taxes | $ | 53,700 | |
| DONALD CORPORATION Comparative Balance Sheet December 31, 2022 and 2021 |
||||||||
| Assets | 2022 | 2021 | ||||||
| Cash | $ | 72,600 | $ | 67,000 | ||||
| Accounts Receivable (Net) | 55,050 | 51,600 | ||||||
| Merchandise Inventory | 48,600 | 53,400 | ||||||
| Prepaid Advertising | 7,600 | 9,400 | ||||||
| Property, Plant, and Equipment | 120,000 | 96,000 | ||||||
| Less: |
(24,200 | ) | (9,600 | ) | ||||
| Total Assets | $ | 279,650 | $ | 267,800 | ||||
| Liabilities and |
||||||||
| Liabilities | ||||||||
| Accounts Payable | 50,050 | 78,400 | ||||||
| Salaries Payable | 5,900 | 3,300 | ||||||
| Unearned Revenues | 3,800 | 6,400 | ||||||
| Income Taxes Payable | 8,100 | 4,600 | ||||||
| Note Payable—2024 | 0 | 26,000 | ||||||
| Total Liabilities | $ | 67,850 | $ | 118,700 | ||||
| Stockholders’ Equity | ||||||||
| Common Stock ($2 par) | 67,000 | 46,000 | ||||||
| 144,800 | 103,100 | |||||||
| Total Stockholders’ Equity | $ | 211,800 | $ | 149,100 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 279,650 | $ | 267,800 | ||||
Additional information for the year that is pertinent to its preparation follows.
- No items of property, plant, and equipment were disposed of during the year.
- Paid cash for the additions to property, plant, and equipment during the year.
- Paid $12,000 dividends on the common stock in cash during the year.
- Issued common stock at par value for cash.
- Paid cash to retire the long-term note payable.
Required:
Prepare a statement of
Analyze:
If Donald Corporation had written off an uncollectible account receivable of $5,900 during this fiscal period, what adjustment, if any, would be required on the statement of cash flows?
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