The following accounts relate to Warlito Blanche Graphic Arts: Accounts Payable P 122,500 Accounts Receivable 219,000 Accumulated Depreciation-Building 60,000 Accumulated Depreciation-Equipment 60,000 Advertising Expense 105,000 Art Revenues 1,437,500 Building 450,000 Cash 36,200 Depreciation Expense-Building 30,000 Depreciation Expense-Equipment 30,000 Equipment 217,000
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.
The following accounts relate to Warlito Blanche Graphic Arts:
Accounts Payable P 122,500
Accumulated
Accumulated Depreciation-Equipment 60,000
Advertising Expense 105,000
Art Revenues 1,437,500
Building 450,000
Cash 36,200
Depreciation Expense-Building 30,000
Depreciation Expense-Equipment 30,000
Equipment 217,000
Interest Expense 37,000
Land 120,000
Miscellaneous Expense 24,600
Mortgage Payable 395,000
Notes Payable 213,000
Office Supplies 17,200
Blanche, Capital, 1/1/2009 50,500
Blanche, Withdrawals 148,600
Representation Expense 164,000
Salaries Expense 673,200
Salaries Payable 17,300
Travel Expense 159,000
During the year, Blanche invested additional P75,000 in the business.
Required:
Prepare the income statement, statement of changes in equity, and
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