Jim Andrews opened a delivery business in March. He rented a small office and has a part-time assistant. His trial balance shows accounts for the first three months of business. Andrews' transactions for the month of June are as follows: June 1 Paid rent, $300. 2 Performed delivery services for $300: $100 in cash and $200 on account. 4 Paid for newspaper advertising, $15. 6 Purchased office supplies on account, $180. 7 Received cash for delivery services rendered, $260. 9 Paid cash on account (truck payment), $200. 10 Purchased a copier (office equipment) for $700: paid $100 in cash and put $600 on account. June 11 Made a contribution to the Red Cross (charitable contributions), $20. 12 Received cash for delivery services rendered, $380. 13 Received cash on account for services previously rendered, $100. 15 Paid a part-time worker, $200. 16 Paid electric bill, $36. 18 Paid phone bill, $46. 19 Received cash on account for services previously rendered, $100. 20 Andrews withdrew cash for personal use, $200. 21 Paid for gas and oil, $32. 22 Made payment on account (for office supplies), $40. 24 Received cash for services rendered, $340. 26 Paid for a magazine subscription (miscellaneous expense), $15. 27 Received cash for services rendered, $180. 27 Received cash on account for services previously rendered, $100. 29 Paid for gasoline, $24. 30 Paid a part-time worker, $200. REQUIRED 1. Set up general ledger accounts by entering the balances as of June 1. 2. Journalize the transactions for June in a two-column general journal. Use the following journal pages: June 1-10, page 7; June 11-20, page 8; June 21-30, page 9. 3. Post the entries to the general ledger.
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.
JOURNALIZING AND POSTING TRANSACTIONS Jim Andrews opened a delivery business in March. He rented a small office and has a part-time
assistant. His
Andrews' transactions for the month of June are as follows:
June 1 Paid rent, $300.
2 Performed delivery services for $300: $100 in cash and $200 on account.
4 Paid for newspaper advertising, $15.
6 Purchased office supplies on account, $180.
7 Received cash for delivery services rendered, $260.
9 Paid cash on account (truck payment), $200.
10 Purchased a copier (office equipment) for $700: paid $100 in cash and
put $600 on account.
June 11 Made a contribution to the Red Cross (charitable contributions), $20.
12 Received cash for delivery services rendered, $380.
13 Received cash on account for services previously rendered, $100.
15 Paid a part-time worker, $200.
16 Paid electric bill, $36.
18 Paid phone bill, $46.
19 Received cash on account for services previously rendered, $100.
20 Andrews withdrew cash for personal use, $200.
21 Paid for gas and oil, $32.
22 Made payment on account (for office supplies), $40.
24 Received cash for services rendered, $340.
26 Paid for a magazine subscription (miscellaneous expense), $15.
27 Received cash for services rendered, $180.
27 Received cash on account for services previously rendered, $100.
29 Paid for gasoline, $24.
30 Paid a part-time worker, $200.
REQUIRED
1. Set up general ledger accounts by entering the balances as of June 1.
2. Journalize the transactions for June in a two-column general journal.
Use the following journal pages: June 1-10, page 7; June 11-20, page 8;
June 21-30, page 9.
3.
4. Prepare a trial Balance.
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