Homework 3 Summarized transactions for January 2018 were as follows: On January 1, 2019, issues 10,000 shares of common stock for cash. On January 5, 2019, purchases equipment on account for 2,500, payment due within the month. On January 8, 2019, receives 3,000 cash in advance from a customer for services not yet rendered. On January 9, 2019, pays 1200 insurance for one year in cash. On January 10, 2019, provides 6,500 in services to a customer who asks to be billed for the services. On January 11, 2019, purchases supplies on account for 500, payment due within three months. On January 12, 2019, pays a 300 utility bill with cash. On January 17, 2019, receives 2,800 cash from a customer for services rendered. On January 19, 2019, paid in full, with cash, for the equipment purchase on January 5. On January 20, 2019, paid 7,600 cash in salaries expense to employees. On January 27, 2019, provides 9,200 in services to a customer who asks to be billed for the services. On January 30, 2019, divident payment of 1,000 made. Instructions Prepare journal entries to record each of the January transactions. (Omit explanations.) Post the journal entries to the accounts in the ledger. Prepare an unadjusted trial balance as of January 31, 2018. ADJUSTMENTS: Insurance expires at the rate of 100. 300 of supplies are on hand. Depreciation on the equipment is 300. Interest of 100 has accured. Prepare journal entries to record each of the January transactions. (Omit explanations.) Post the journal entries to the accounts in the ledger. Prepare an adjusted trial balance as of January 31, 2018. Prepare Income Statement. Prepare Retained Equity Statement. Prepare Balance Sheet. Jornalize the closing entries. Prepare an post trial balance as of January 31, 2018.
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.
Homework 3
Summarized transactions for January 2018 were as follows:
On January 1, 2019, issues 10,000 shares of common stock for cash.
On January 5, 2019, purchases equipment on account for 2,500, payment due within the month.
On January 8, 2019, receives 3,000 cash in advance from a customer for services not yet rendered.
On January 9, 2019, pays 1200 insurance for one year in cash.
On January 10, 2019, provides 6,500 in services to a customer who asks to be billed for the services.
On January 11, 2019, purchases supplies on account for 500, payment due within three months.
On January 12, 2019, pays a 300 utility bill with cash.
On January 17, 2019, receives 2,800 cash from a customer for services rendered.
On January 19, 2019, paid in full, with cash, for the equipment purchase on January 5.
On January 20, 2019, paid 7,600 cash in salaries expense to employees.
On January 27, 2019, provides 9,200 in services to a customer who asks to be billed for the services.
On January 30, 2019, divident payment of 1,000 made.
Instructions
- Prepare
journal entries to record each of the January transactions. (Omit explanations.) Post the journal entries to the accounts in the ledger.- Prepare an unadjusted
trial balance as of January 31, 2018.
ADJUSTMENTS:
- Insurance expires at the rate of 100.
- 300 of supplies are on hand.
Depreciation on the equipment is 300.- Interest of 100 has accured.
- Prepare journal entries to record each of the January transactions. (Omit explanations.)
- Post the journal entries to the accounts in the ledger.
- Prepare an adjusted trial balance as of January 31, 2018.
- Prepare Income Statement.
- Prepare Retained Equity Statement.
- Prepare Balance Sheet.
- Jornalize the closing entries.
- Prepare an post trial balance as of January 31, 2018.
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