In addition to those accounts listed on the trial balance, the chart of accounts for McGee Company also contains the following accounts and account numbers: No. 158 Accumulated Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense, No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense. Other data: 1. Supplies on hand at June 30 are $750. 2. A utility bill for $150 has not been recorded and will not be paid until next month. 3. The insurance policy is for a year. 4. $2,800 of unearned service revenue has been earned at the end of the month. 5. Salaries of $1,900 are accrued at June 30. 6. The equipment has a 5-year life with no salvage value. It is being depreciated at $250 per month for 60 months. 7. Invoices representing $1,200 of services performed during the month have not been recorded as of June 30. Instructions (a) Prepare the adjusting entries for the month of June. Use J3 as the page number for your journal. (b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances and place a check mark in the posting reference column. (c) Prepare an adjusted trial balance at June 30, 2012.
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.
In addition to those accounts listed on the
Company also contains the following accounts and account numbers: No. 158 Accumulated
Depreciation—Equipment, No. 212 Salaries and Wages Payable, No. 631 Supplies Expense,
No. 711 Depreciation Expense, No. 722 Insurance Expense, and No. 732 Utilities Expense.
Other data:
1. Supplies on hand at June 30 are $750.
2. A utility bill for $150 has not been recorded and will not be paid until next month.
3. The insurance policy is for a year.
4. $2,800 of unearned service revenue has been earned at the end of the month.
5. Salaries of $1,900 are accrued at June 30.
6. The equipment has a 5-year life with no salvage value. It is being
7. Invoices representing $1,200 of services performed during the month have not been recorded as of June 30.
Instructions
(a) Prepare the
(b)
(c) Prepare an adjusted trial balance at June 30, 2012.
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