he unadjusted trial balance of Sketch Star Makers Incorporated, prepared as of December 31, 2022, includes the following account balances. All of the accounts listed have normal balances. Cash $ 14,500 Accounts Receivable 2,900 Supplies 2,800 Prepaid Insurance 6,600 Equipment 19,000 Accumulated Depreciation 2,900 Notes Payable (long-term) 29,000 Deferred Revenue 9,500 Service Revenue 39,000 Salaries and Wages Expense 34,500 The following information is also available: A) After a count of supplies, there were $1,300 worth of supplies remaining on hand at December 31, 2022. B) An insurance policy, purchased on January 1, 2022, covers five years. C) The equipment depreciates at a rate of $1,900 per year; no depreciation has been recorded for 2022. D) One half (or 50%) of the amount recorded as Deferred Revenue remains deferred as of December 31, 2022. E) The accrued amount of salaries and wages at December 31, 2022 is $2,900. Required: Prepare the required adjustments for the company as of December 31, 2022
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.
31
he unadjusted
| Cash | $ 14,500 |
|---|---|
| Accounts Receivable | 2,900 |
| Supplies | 2,800 |
| Prepaid Insurance | 6,600 |
| Equipment | 19,000 |
| Accumulated |
2,900 |
| Notes Payable (long-term) | 29,000 |
| Deferred Revenue | 9,500 |
| Service Revenue | 39,000 |
| Salaries and Wages Expense | 34,500 |
The following information is also available:
- A) After a count of supplies, there were $1,300 worth of supplies remaining on hand at December 31, 2022.
- B) An insurance policy, purchased on January 1, 2022, covers five years.
- C) The equipment depreciates at a rate of $1,900 per year; no depreciation has been recorded for 2022.
- D) One half (or 50%) of the amount recorded as Deferred Revenue remains deferred as of December 31, 2022.
- E) The accrued amount of salaries and wages at December 31, 2022 is $2,900.
Required:
Prepare the required adjustments for the company as of December 31, 2022. (If no entry is required for a transaction/event, select "No
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