Mundt Services uses the following accounts.Cash Accounts Receivable - J. LepowskySupplies Prepaid InsuranceAccounts Payable - Southern SuppliesMikaela Mundt, Capital Mikaela Mundt, DrawingSales Advertising ExpenseUtilities ExpenseTransactions: Aug. 1. Mikaela Mundt invested $ 2,000.00 of her own money in thebusiness. Receipt No. 1.3. Used business cash to purchase supplies costing $ 216.00. Wrote CheckNo. 1. 4. Wrote Check No. 2 for insurance, $ 245.00.5. Purchased supplies for $ 68.00 over the phone from SouthernSupplies, promising to send the check next week. Memo No.1. 11. Sent Check No. 3 to Southern Supplies, $ 68.00.12. Sent a check for the electricity bill, $ 180.00. Check No. 4.15. Wrote an $ 800.00 check to Ms. Mundt as a withdrawal of equity forpersonal use. Used Check No. 5. 16. Sold services for $ 412.00 to J. Lepowsky, who agreed to pay for themwithin ten days. Sales Invoice No. 1.17. Recorded cash sales of $ 1,179.00. Calculator tape dated August $17.T17. 18. Paid $ 132.00 for advertising. Wrote Check No. 6.25. Received $ 412.00 from J. Lepowsky for the services performed lastweek. Wrote Receipt No. 2.Instructions: Journalize the transactions completed during August of the current year.Use page 1 of the journal given in the Working Papers. Remember torecord appropriate source document numbers.
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.
Mundt Services uses the following accounts.
Cash
Supplies
Prepaid Insurance
Accounts Payable - Southern Supplies
Mikaela Mundt, Capital
Mikaela Mundt, Drawing
Sales
Advertising Expense
Utilities Expense
Transactions:
Aug. 1. Mikaela Mundt invested $ 2,000.00 of her own money in the
business. Receipt No. 1.
3. Used business cash to purchase supplies costing $ 216.00. Wrote Check
No. 1.
4. Wrote Check No. 2 for insurance, $ 245.00.
5. Purchased supplies for $ 68.00 over the phone from Southern
Supplies, promising to send the check next week. Memo No.1.
11. Sent Check No. 3 to Southern Supplies, $ 68.00.
12. Sent a check for the electricity bill, $ 180.00. Check No. 4.
15. Wrote an $ 800.00 check to Ms. Mundt as a withdrawal of equity for
personal use. Used Check No. 5.
16. Sold services for $ 412.00 to J. Lepowsky, who agreed to pay for them
within ten days. Sales Invoice No. 1.
17. Recorded cash sales of $ 1,179.00. Calculator tape dated August $17.
T17.
18. Paid $ 132.00 for advertising. Wrote Check No. 6.
25. Received $ 412.00 from J. Lepowsky for the services performed last
week. Wrote Receipt No. 2.
Instructions:
Journalize the transactions completed during August of the current year.
Use page 1 of the journal given in the Working Papers. Remember to
record appropriate source document numbers.
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