Sheldons Consultants Company's trial balance on December 31, 2015 is as follows: Sheldons Consultants Company Trial Balance 12/31/2015 Cash 12,786 Accounts Receivable 24,840 Office Supplies 991 Prepaid Rent 1,400 Office Equipment 6,700 Accumulated Depreciation-Office Equipment 1,600 Accounts Payable 1,820 Notes Payable 10,000 Unearned Service Revenue 2,860 Sheldon, Capital 29,387 Sheldon, Withdrawals 15,000 Service Revenue 58,500 Salaries Expense 33,000 Utilities Expense 1,750 Rent Expense 7,700 104,167 104,167 The following information is also available: a. Ending inventory of office supplies, $86 b. Prepaid rent expired, $700 c. Depreciation of office equipment for the period, $600 d. Interest accrued on the note payable, $600 e. Salaries accrued at the end of the period, $200 f. Service revenue still unearned at the end of the period, $1,410 g. Service revenue earned but not billed, $600 You are required to do the following: 1. Open T accounts for the accounts in the trial balance plus the following: Interest Payable; Salaries Payable; Office Supplies Expense; Depreciation Expense-Office Equipment; and Interest Expense Enter the account balances 2. Determine the adjusting entries and post them directly to the T-Accounts and also journalize the adjusting entries. 3. Prepare an adjusted trial balance.
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.
Sheldons Consultants Company's
| Sheldons Consultants Company | ||
| Trial Balance | ||
| 12/31/2015 | ||
| Cash | 12,786 | |
| 24,840 | ||
| Office Supplies | 991 | |
| Prepaid Rent | 1,400 | |
| Office Equipment | 6,700 | |
| 1,600 | ||
| Accounts Payable | 1,820 | |
| Notes Payable | 10,000 | |
| Unearned Service Revenue | 2,860 | |
| Sheldon, Capital | 29,387 | |
| Sheldon, Withdrawals | 15,000 | |
| Service Revenue | 58,500 | |
| Salaries Expense | 33,000 | |
| Utilities Expense | 1,750 | |
| Rent Expense | 7,700 | |
| 104,167 | 104,167 | |
| The following information is also available: | ||
| a. Ending inventory of office supplies, $86 | ||
| b. Prepaid rent expired, $700 | ||
| c. Depreciation of office equipment for the period, $600 | ||
| d. Interest accrued on the note payable, $600 | ||
| e. Salaries accrued at the end of the period, $200 | ||
| f. Service revenue still unearned at the end of the period, $1,410 | ||
| g. Service revenue earned but not billed, $600 | ||
| You are required to do the following: | ||
| 1. Open T accounts for the accounts in the trial balance plus the following: Interest Payable; Salaries Payable; Office Supplies Expense; Depreciation Expense-Office Equipment; and Interest Expense | ||
| Enter the account balances | ||
| 2. Determine the |
||
| 3. Prepare an adjusted trial balance. |
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