Check Figures For Case 1 On Worksheet 1: Debit And Credit

Check Figures For Case 1on The Worksheet1 The Debit And Credit Colu

Check Figures for Case 1 on the Worksheet: 1. The debit and credit columns of your AJE’s should total to: $1,008. The Adjusted Trial Balance columns should total to: $15,260. Net Income from Income Summary (the third closing entry) should be $618,609. This should match Net Income reported on CY Inc. Stmt. Total Stockholder’s Equity on CY Balance Sheet should be: $1,685,678. This should match your ending balance on Statement of Stockholder’s Equity.

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Paper For Above instruction

Introduction

The purpose of this paper is to analyze and verify the accuracy of the adjusted trial balance, net income, and stockholders’ equity figures for CM Corporation (CMC) based on the provided worksheet and accounting data. Accurate financial statement preparation hinges on meticulous adjustments, proper posting, and reconciliation of figures derived from detailed journal entries, especially in a complex scenario like CMC’s. This process underscores the importance of understanding the relationship among various financial statements and internal controls necessary to produce trustworthy financial data.

Analysis of Figures and Adjustments

The initial step involves examining the critical figures to ensure consistency and reliability. The worksheet indicates that the total of the debit and credit columns of the Adjusting Journal Entries (AJE’s) should sum to $1,008. This reflects the total of all adjustments made to the books prior to financial statement preparation. Achieving this balanced figure indicates that the journal entries have been correctly recorded and posted, preserving the fundamental accounting equation.

Furthermore, the adjusted trial balance must total $15,260. This amount signifies that after adjustments, the ledger accounts are correctly balanced and ready for financial statement preparation. Any discrepancies in this total could highlight missing or improperly posted journal entries. Proper adjustments include accrued wages and taxes, unearned revenue recognition, inventory adjustments, bad debt estimation, prepaid expense amortization, depreciation, interest accruals, dividends declaration, fair value adjustments, and tax allocations.

Net income from the income summary should precisely be $618,609. This figure is critical because it directly impacts the calculation of retained earnings on the statement of stockholders’ equity and the overall net worth of the company. Accurate net income calculation depends on precise recording of revenues, expenses, gains, and losses, which must be thoroughly verified.

Lastly, the total stockholders’ equity on the current year’s balance sheet should amount to $1,685,678, matching the ending balance reported in the Statement of Stockholder’s Equity. This total reflects the cumulative effect of all transactions, including net income or loss, dividends paid, and stock transactions during the period.

Reconciliation and Implications

The process of finalizing financial statements involves meticulously reconciling these figures. This entails verifying that the sum of all adjustments aligns with the totals, that net income is accurately derived from the adjusted results, and that the ending balances in equity accounts reconcile with prior statements and current period activity.

Incorrect totals in any of these areas could indicate errors such as double counting, omission, or incorrect classification of adjustments. Therefore, an essential part of the process involves cross-verifying figures across the worksheet, trial balance, and financial statements.

Role of Adjustments in Financial Reporting

Adjustments play a crucial role in aligning reported financial statements with the actual economic activities of the company. For CMC, adjustments such as recognizing accrued wages and taxes, inventory adjustments for unsold or shipped goods, amortization of prepaid expenses, depreciation of assets, and fair value adjustments to investments ensure compliance with generally accepted accounting principles (GAAP). They improve the accuracy and reliability of financial reports, thereby reinforcing stakeholder confidence.

Conclusion

In conclusion, the verification of the figures provided for CM Corporation’s worksheet and financial statements demonstrates the importance of precise adjustments and rigorous reconciliation processes. By ensuring that the totals of the debit and credit columns of AJEs match, the adjusted trial balance aligns with expected figures, and net income and stockholders’ equity are accurately reported, the integrity of financial reporting is maintained. This thorough process fosters transparency and provides meaningful insights into the financial health of CM Corporation, essential for decision-making, investor confidence, and regulatory compliance.

References

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