Q.3 Jonah is a sole trader who keeps full double entry accounting records including a three column cash book. All cheques received are banked on the same day. On 30 June 2004 balances in his books included the following. Cash 600 Bank (Dr) 2500 Debtors Creditors H Syde J Teime 500 400 B Sharp 800 P Mulder 1000 M Yaveli 630 Jonah's transactions for the month of July 2004 included the following. July 3 H Syde paid the amount he owed by cheque after deducting cash discount of $10. 7 Cash was withdrawn from bank for office use. 200 10 Paid J Teime by cheque after deducting $15 cash discount. 12 Paid wages in cash. 400 14 B Sharp paid the amount he owed by cheque after deducting cash discount of $20. 17 Paid P Mulder by cheque after deducting cash discount of $25. 20 Cash sales paid directly into bank. 350 21 MYaveli paid the amount he owed by cheque. 24 Paid wages in cash. 250 Paid electricity bil by cheque. 600 29 Jonah's bank returned M Yavel's cheque for $630 as dishonoured. (a) Enter the transactions shown on the next page in Jonah's cash book on the page provided (the cash and bank balances on 1 July 2004 have already been entered) Balance the cash book at 31 July and bring down the balances on 1 Aug 2004. [20]
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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Q.3 Jonah is a sole trader who keeps full double entry accounting records including a
three
column cash book. All cheques received are banked on the same day.
On 30 June 2004 balances in his books included the following.
Cash
600
Bank (Dr) 2500
Debtors
Creditors
J Teime
P Mulder
H Syde
500
400
B Sharp
800
1000
M Yaveli
630
Jonah's transactions for the month of July 2004 included the following.
H Syde paid the amount he owed by cheque after deducting cash discount of
July 3 H
$10.
7 Cash was withdrawn from bank for office use. 200
Paid J Teime by cheque after deducting $15 cash discount.
10
12
Paid wages in cash. 400
14 B Sharp paid the amount he owed by cheque after deducting cash discount of
$20.
17 Paid P Mulder by cheque after deducting cash discount of $25.
20 Cash sales paid directly into bank. 350
21
M Yaveli paid the amount he owed by cheque.
24 Paid wages in cash. 250
Paid electricity bill by cheque. 600
29
Jonah's bank returned M Yaveli's cheque for $630 as dishonoured.
(a) Enter the transactions shown on the next page in Jonah's cash book on the page
provided (the cash and bank balances on 1 July 2004 have already been entered)
Balance the cash book at 31 July and bring down the balances on 1 Aug 2004. [20]
5/6
II
Discount Cash](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F93342edb-b1f5-432f-b51b-9fabecca5365%2F135a807c-06a5-43dd-92d1-71814901e535%2Falbptkl_processed.jpeg&w=3840&q=75)
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