Cargo Wings provides the following data for the month. Invested in the business; Inventory 15,000; Cash 25,000; Motor Vehicle 10,000; Receivable 7,000; Machinery 8,000 & Creditors 15,000. Bought Goods from AR Electric store for $450 Sales $2000 made on credit to Bashir Sons on March 15. Mr. Umair offered 5% discount if the payment will be made in the same month Applied for Loan from Faysal Bank Ltd. of $ 15,000. Purchased office furniture from Interwood by paying $2400 half of the total amount. Bashir Sons returned goods worth $500 Sold Good to Rashid Ltd. for $3200 Zakir Ltd purchased goods from us for $2300 Habib Sons bought goods by paying $1200 cash and the remaining $800 will be paid next month Bashir sons paid the due amount on March 30. Habib Sons paid $500 on March 30 Gave away charity of cash Rs. 50 Omer brought his bedroom Chairs into the business worth Rs. 1,750 Commission paid as referral fee $1,300 Returned Furniture of $500 purchased from Interwood and paid the remaining balance due. Bad Debts during the period was $600 Received the bank loan applied for. Business has suffered a loss of $1,500 Required: Prepare Journal, Ledger & Trial Balance from the data given above.
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.
Cargo Wings provides the following data for the month.
- Invested in the business; Inventory 15,000; Cash 25,000; Motor Vehicle 10,000; Receivable 7,000; Machinery 8,000 & Creditors 15,000.
- Bought Goods from
AR Electric store for $450
- Sales $2000 made on credit to Bashir Sons on March 15. Mr. Umair offered 5% discount if the payment will be made in the same month
- Applied for Loan from Faysal Bank Ltd. of $ 15,000.
- Purchased office furniture from Interwood by paying $2400 half of the total amount.
- Bashir Sons returned goods worth $500
- Sold Good to Rashid Ltd. for $3200
- Zakir Ltd purchased goods from us for $2300
- Habib Sons bought goods by paying $1200 cash and the remaining $800 will be paid next month
- Bashir sons paid the due amount on March 30.
- Habib Sons paid $500 on March 30
- Gave away charity of cash Rs. 50
- Omer brought his bedroom Chairs into the business worth Rs. 1,750
- Commission paid as referral fee $1,300
- Returned Furniture of $500 purchased from Interwood and paid the remaining balance due.
Bad Debts during the period was $600- Received the bank loan applied for.
- Business has suffered a loss of $1,500
Required:
Prepare Journal,
Ledger &
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