Adjusting Journal Entries

Balance Sheet

In financial accounting, a financial statement or a balance sheet is a summarized form of the financial balances of a company, a partnership or a sole proprietorship. It is often described as a small snapshot of the financial conditions of a company. It is a statement accounting for the economic unit at a specified date, it is important to obtain information through this list of financial liquidity, especially over the economic union with certain financial ratios, and includes the following main elements. (Epstein, 2007)

A - Assets

B - Liabilities

C - Stockholders Equity

Daily accounting operations involving elements of this list and other lists, are recorded in the journal, and migrated to what is called the general ledger, and then to the trial balance, up to the balance sheet of that asset in the accuracy of this information. (Jane, 2008)

Hydromaint Inc.

Balance Sheet

As of December 31, 2002

Assets

Current Assets

Cash $59,358

Account receivable$179,900

Less: Allowance for Bad debts (40,200)

Account Receivable, net 139,700

Merchandise Inventory177,500

Supplies Inventory21,921

Trading Securities46,400

Deferred Income Tax Short Term8,940

Total Current Assets $453,819

Property, Plant & Equipment

Land 100,000

Buildings215,000

Less: Accumulated Depreciation(10,750)204,250

Equipment- at cost 30,000

Less: Accumulated Depreciation(30,000)-

Trucks- at Cost392,286

Less: Accumulated Depreciation(196,972)195,314

Leased Building 380,000

Less: Accumulated Depreciation(57,000)323,000

Total Property, Plant & Equipment $822,564

Other Assets

Equity Investment 1,733,333

Long Term Equity Security 339,634

Deferred Pension Cost 40,075

Licensing Cost 30,000

Less: Amortization(30,000)

Licensing Cost, net -

Total Assets $ 3,389,425

Liabilities & Shareholders' Equity

Liabilities

Current Liabilities

Account Payable$135,691

Unearned Revenue100,000

Income Tax payable48,276

Interest Payable35,557

Short Term portion of L-T Debt77,556

Total Current Liabilities $397,080

Long Term Liabilities

Note Payable 78,022

Capital Lease Liability317,438

Accrued Pension Liability52,230

Deferred income Tax Long Term 3,513

Total Long Term Liabilities 451,203

Total Liabilities 848,283

Shareholder's Equity

Preferred Stock (10% convertible, non-cumulative, $700,000

$100 par value, 7000 shares issued & outstanding)

Common Stock ($ 10 par value, 25000 shares authorized, 120,000

12,000 shares issued, all at par)

Additional paid in capital- preferred stock 875,000

Retained Earnings 846,142

Total Owner's Equity 2,541,142

Total Liabilities & Owner Equity $3,389,425

Income Statement

There are certain financial measures that assist the company to report and evaluate its financial performance such as income statement, balance sheet and cash flows. The income statement is a measure which is also applicable for the individuals to report their earning and expenses of certain period. The internal bodies have developed certain principles which must be followed by the companies and individuals during the formation of income statements. Generally, this standard is known as International Financial Reporting Standards “IFRS”. The income statement is also known as statements of operations or earnings. The income statement incorporates all revenues and expenses of the company. There are two types of format that can be used while preparing income statement which are known as single step and multi step. In the single step, there are two separate groups for revenues and expenses accounts. Therefore, first the company or individual used to accumulate all revenues and find net revenues which require deduction of sales return and sales discount. Second, the company or individual used to accumulate all expenses to find the amount of total expenses. Then total expense will be deducted from net revenues to reach to net income or profit. In multi step format, Company or individual uses the similar ...