Listed below are the income statement accounts of MBA Company as of December 31,2020. DEBIT CREDIT Sales P 475,000 Sales Return & Allowances P 5,000 Purchases 220,000 Purchase Return & Allowances 3,000 Advertising 10,000 Sales Salaries 30,000 Commission Expense 15,000 Miscellaneous Selling Expense 3,000 Rent Expense 15,000 Office Salaries 20,000 Light & Water 2,000 Insurance Expense 1,000 Taxes & Licenses 5,000 Merchandise Inventory- Jan. 1,2019 57,000 Merchandise Inventory-Dec. 31,2019 10,000 Required: Compute the following; 1. Net Sales_________________________ 2. Net Purchases_____________________ 3. Cost of Goods Sold_________________ 4. Reporting Period__________________ 5. Net Profit_______________
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.
I. Listed below are the income statement accounts of MBA Company as of December 31,2020.
DEBIT CREDIT
Sales P 475,000
Sales Return & Allowances P 5,000
Purchases 220,000
Purchase Return & Allowances 3,000
Advertising 10,000
Sales Salaries 30,000
Commission Expense 15,000
Miscellaneous Selling Expense 3,000
Rent Expense 15,000
Office Salaries 20,000
Light & Water 2,000
Insurance Expense 1,000
Taxes & Licenses 5,000
Merchandise Inventory- Jan. 1,2019 57,000
Merchandise Inventory-Dec. 31,2019 10,000
Required:
Compute the following;
1. Net Sales_________________________
2. Net Purchases_____________________
3. Cost of Goods Sold_________________
4. Reporting Period__________________
5. Net Profit________________________
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