Here are the accounts in the ledger of Misha’s Jewel Box, with the balances as of December 31, the end of its fiscal year. Cash $ 13,242 Accounts Receivable 3,984 Merchandise Inventory 126,540 Supplies 2,484 Prepaid Insurance 2,655 Land 18,000 Building 97,000 Accumulated Depreciation, Building 38,240 Store Equipment 46,170 Accumulated Depreciation, Store Equipment 16,250 Accounts Payable 8,270 Sales Tax Payable 2,371 Mortgage Payable 77,871 M. Beloit, Capital 185,000 M. Beloit, Drawing 48,000 Sales 379,354 Sales Returns and Allowances 3,892 Cost of Goods Sold 279,198 Salary Expense 54,400 Advertising Expense 3,526 Utilities Expense 2,538 Property Tax Expense 1,162 Miscellaneous Expense 1,613 Interest Expense 2,952 Here are the data for the adjustments. Assume that Misha’s Jewel Box uses the perpetual inventory system. a. Merchandise Inventory at December 31, $124,630. b. Insurance expired during the year, $1,294. c. Depreciation of building, $3,300. d. Depreciation of store equipment, $6,470. e. Salaries accrued at December 31, $2,470. f. Store supplies inventory (on hand) at December 31, $1,959. Required: 1. Complete the work sheet after entering the account names and balances onto the work sheet. 2. Journalize the adjusting entries. Chart of accounts: Misha’s Jewel Box General Ledger ASSETS 111 Cash 113 Accounts Receivable 114 Merchandise Inventory 115 Store Supplies 116 Prepaid Insurance 124 Store Equipment 124.1 Accumulated Depreciation, Store Equipment 127 Building 127.1 Accumulated Depreciation, Building 130 Land LIABILITIES 212 Accounts Payable 214 Sales Tax Payable 215 Salaries Payable 235 Notes Payable 250 Unearned Rent EQUITY 311 M. Beloit, Capital 312 M. Beloit, Drawing 313 Income Summary REVENUE 411 Sales 412 Sales Returns and Allowances 413 Sales Discounts 414 Rent Income EXPENSES 500 Cost of Goods Sold 514 Freight-in 533 Insurance Expense 537 Store Supplies Expense 538 Utilities Expense 541.1 Depreciation Expense, Store Equipment 541.3 Depreciation Expense, Building 551 Advertising Expense 621 Salaries Expense 622 Payroll Tax Expense 627 Rent Expense 628 Property Tax Expense 631 Miscellaneous Expenses 810 Interest Expense
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.
| Cash | $ 13,242 |
| 3,984 | |
| Merchandise Inventory | 126,540 |
| Supplies | 2,484 |
| Prepaid Insurance | 2,655 |
| Land | 18,000 |
| Building | 97,000 |
| 38,240 | |
| Store Equipment | 46,170 |
| Accumulated Depreciation, Store Equipment | 16,250 |
| Accounts Payable | 8,270 |
| Sales Tax Payable | 2,371 |
| Mortgage Payable | 77,871 |
| M. Beloit, Capital | 185,000 |
| M. Beloit, Drawing | 48,000 |
| Sales | 379,354 |
| Sales Returns and Allowances | 3,892 |
| Cost of Goods Sold | 279,198 |
| Salary Expense | 54,400 |
| Advertising Expense | 3,526 |
| Utilities Expense | 2,538 |
| Property Tax Expense | 1,162 |
| Miscellaneous Expense | 1,613 |
| Interest Expense | 2,952 |
| Here are the data for the adjustments. Assume that Misha’s Jewel Box uses the perpetual inventory system. | |
| a. | Merchandise Inventory at December 31, $124,630. |
| b. | Insurance expired during the year, $1,294. |
| c. | Depreciation of building, $3,300. |
| d. | Depreciation of store equipment, $6,470. |
| e. | Salaries accrued at December 31, $2,470. |
| f. | Store supplies inventory (on hand) at December 31, $1,959. |
| Required: | |
| 1. | Complete the work sheet after entering the account names and balances onto the work sheet. |
| 2. |
Journalize the |
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