P13 Presented below is the unadjusted trial balance of the CHJB Information Systems for the year ended Dec. 31, 2019 CHJB Information Systems Unadjusted Trial Balance Dec. 31, 2020 Cash P 45,000 Notes Receivable 360,000 Accounts Receivable 156,000 Office Supplies 63,000 Land 300,000 Building 1,590,000 Accumulated Depreciation – Building P 254,000 Equipment 2,150,000 Accumulated Depreciation – Equipment 612,000 Accounts Payable 213,000 Unearned Consulting Revenues 450,000 CHJB, Capital 2,655,000 CHJB, Withdrawals 600,000 Consulting Revenues 2,108,000 Salaries Expense 875,000 Repairs Expense 116,000 Miscellaneous Expense 37,000 TOTAL P P 6,292,000 6,292,000 Additional Information: (A) Office supplies on hand as at Dec. 31, 2020 is P21,000. (B) One-third of the unearned revenues has been earned as at Dec. 31, 2020. (C) Depreciation for the year amounted to P38,000 for the building and P123,000 for the equipment. (D) Salaries in the amount of P14,000 have accrued at year-end. (E) The notes receivable were accepted from several customers. The notes were issued on Sept. 1, 2020 and will be settled together with a 20% interest on May 31, 2021. Required: (1) Prepare a completed worksheet and journalize the adjusting entries. (2) Prepare the adjusted trial balance, income statement, statement of changes in equity and the balance sheet.
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.
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