On Jul1 1, 2016, Mr. Jan Jacob C. Solon opened the Hubbies Hair and Beauty Salon. The following transactions took place during the first month of operation: July 1 - Php 200,000.00 was invested by the owner. - Paid installation of utilities, Php 7,200.00 2 - Paid business permits and licenses to the government, Php 3,500.00 Paid advance rent for the salon space, Php 10,000.00 3 - Purchased equipment on account amounting to Php 85,000.00 - Purchases salon supplies in cash, Php 25,000.00 5 - Served various customers and received cash, Php 9,600.00 7 - Rendered services, Php 12,000.00 and only 9,000 cash was received. The rest was on account. 10 - Received cash, Php 8,200.00 from various customers. 13 Received Php 23,500.00 cash from various customers while Php 2,400.00 worth of services were still receivables. 15 - Paid salaries of salon assistants, Php 7,600.00 18 - Received cash for services rendered, Php 14,100.00 21 - Received and paid bill on utilities, Php 2,200.00 23 - Received cash of Php 7,500.00 from various customers. 28 - Collected 50% of the account on July 7, 2016. 29 - Received cash for services rendered, Php 10,200.00 30 - Collected the account on July 13. 31 - Withdrew Php 10,000.00 cash for personal use. - Paid salaries of assistants, Php 7,600.00 Instructions: Plot the transactions in the t-accounts using the following account titles: Cash on Hand Accounts Receivable Salon Supplies Prepaid Rent Salon Equipment Accounts Payable Solon, Capital Solon, Withdrawal Salon Services Revenue Permits and Licenses Utilities Expense Salaries Expense
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.
On Jul1 1, 2016, Mr. Jan Jacob C. Solon opened the Hubbies Hair and Beauty Salon. The following transactions took place during the first month of operation:
July 1 - Php 200,000.00 was invested by the owner.
- Paid installation of utilities, Php 7,200.00
2 - Paid business permits and licenses to the government, Php 3,500.00
Paid advance rent for the salon space, Php 10,000.00
3 - Purchased equipment on account amounting to Php 85,000.00
- Purchases salon supplies in cash, Php 25,000.00
5 - Served various customers and received cash, Php 9,600.00
7 - Rendered services, Php 12,000.00 and only 9,000 cash was received. The rest was on account.
10 - Received cash, Php 8,200.00 from various customers.
13 Received Php 23,500.00 cash from various customers while Php 2,400.00 worth of services were still receivables.
15 - Paid salaries of salon assistants, Php 7,600.00
18 - Received cash for services rendered, Php 14,100.00
21 - Received and paid bill on utilities, Php 2,200.00
23 - Received cash of Php 7,500.00 from various customers.
28 - Collected 50% of the account on July 7, 2016.
29 - Received cash for services rendered, Php 10,200.00
30 - Collected the account on July 13.
31 - Withdrew Php 10,000.00 cash for personal use.
- Paid salaries of assistants, Php 7,600.00
Instructions:
Plot the transactions in the t-accounts using the following account titles:
Cash on Hand
Salon Supplies
Prepaid Rent
Salon Equipment
Accounts Payable
Solon, Capital
Solon, Withdrawal
Salon Services Revenue
Permits and Licenses
Utilities Expense
Salaries Expense
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