After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona's Designs: Accounts Payable $27,600 Rent Expense $32,700 Accounts Receivable 64,500 Salary Expense 41,390 Accumulated Depreciation 73,325 Salaries Payable 8,150 Cash 17,150 Service Revenue 186,000 Depreciation Expense 13,500 Supplies 1,500 Equipment 165,000 Supplies Expense 2,500 Insurance Expense 2,510 Ramona Cross, Capital 99,950 Prepaid Insurance 6,275 Ramona Cross, Drawing 48,000 Journalize the entries to close the appropriate accounts. If an amount box does not require an entry, leave it blank.
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.
After all adjustments have been made, but before the accounts have been closed, the following balances were taken from the ledger of Ramona's Designs:
| Accounts Payable | $27,600 | Rent Expense | $32,700 | |
| 64,500 | Salary Expense | 41,390 | ||
| Accumulated |
73,325 | Salaries Payable | 8,150 | |
| Cash | 17,150 | Service Revenue | 186,000 | |
| Depreciation Expense | 13,500 | Supplies | 1,500 | |
| Equipment | 165,000 | Supplies Expense | 2,500 | |
| Insurance Expense | 2,510 | Ramona Cross, Capital | 99,950 | |
| Prepaid Insurance | 6,275 | Ramona Cross, Drawing | 48,000 |
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