Let us assume that the Adjusted Trial Balance of Masagana Tailoring Shop as of December31,2018 is as follows: MASAGANA TAILORING SHOP Unadjusted Trial Balance December 31, 2018 Accounts Debit Credit P18,600 8,000 5,000 6,000 10,000 50,000 Cash Accounts Receivable Notes Receivable Prepaid Rent Furniture Equipment Accounts payable Notes Payable P 6,000 4,000 Unearned Interest Income 600 Masagana, Capital Masagana, Drawing 80,000 5,000 Service Income 25,000 Salaries 10,000 Rent Expense Interest Expense Electricity 1,000 500 1,500 P115,600 Totals P115,600 Additional information: 1. Unrecorded bill for the month of December was sent to customer,P2,000. 2. Unrecorded salaries,P2,000. 3. Prepaid rent representing three months advance payment starting December 1,2018. 4. Unearned interest income as of December 31,2018 amounting to P300. 5. Equipment acquired November 1, 2018.The estimated life of the equipment is 30 years. The company uses straight line line method of computing the deprecation. 6. Uncollectible accounts estimated to be 1% of the outstanding accounts receivable. REQUIRED: 1. Prepare a 10 column Worksheet. 2. Prepare the necessary adjusting journal entries. 3. Post the adjusting entries to the general ledger. 4. Prepare the adjusted trial balance 5. Prepare the Financial Statements
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.
Step by step
Solved in 2 steps with 6 images