Activity 1.1 Friendly Trucking On April 1, 2019, Nels Ferrer organized a business called Friendly Trucking. During April, the company entered into the following transactions: Apr 1 Nels Ferrer deposited Php500,000 cash in a bank account in the name of the business. Apr 1 Purchased for Php250,000 a transportation equipment to be use in the business. Nels paid 50% as down payment while the balance will be paid on May 15, 2019 Apr 1 Paid rental for the month of April, Php 5,000 Apr 5 Earned and collected trucking income from Ryan, Php8,000 Apr 8 Earned trucking income from Jesper, Php 30,000 on account. Jesper will pay on May 8, 2019 Apr 10 Paid salaries of drivers, Php10,000 Apr 15 Rented the vehicle to Joshua for Php35,000, Joshua paid Php20,000 on that date and the balance on April 20 Paid electric bills for the month, Php2,000 Apr 18 Apr 20 Collected from Joshua the balance of his April 15 account Apr 25 Purchased office supplies, Php2,300 Apr 29 Earned and collected trucking income from Jay, Php 18,000 Instructions: a. Journalize the above transactions b. Post to ledger using the T-account format c. Prepare the unadjusted trial balance, as of April 30, 2019
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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