You are given the following post-closing trial balance of Clinton Company for December 31, 2018: Debits Credits Cash on hand and in bank Accounts receivable Allowance for doubtful accounts Advances to employces Interest receivable Prepaid expenses Merchandise inventory 35,000 240,000 8,000 4,800 3,000 16,200 180,000 200,000 500,000 Land Building Accumulated depreciation - building Equipment Accumulated depreciation - equipment Utility deposit Other assets 150,000 192,000 59,200 15,000 6,000 Accounts payable Advances from customers Interest payable Accrued expenses Mortgage payable Ordinary shares Retained earnings Totals 260,000 10,000 18,000 30,000 600,000 400,000 143,200 1,535,200 1,535,200 Your examination of the company's accounts disclosed the following information: 1. It was disclosed that goods costing P20,000 which were consigned to Anne Company for sale at 140% above cost were recorded as sold upon shipment on November 1, 2018. The goods were unsold at year-end. 2. Equipment acquired for P10,000 on July 1, 2016 was sold for P9,000 cash on July 1, 2018. The proceeds from the sale were credited to the equipment account. New equipment purchased on October 1, 2018 for P20,000 was charged to Repairs and Maintenance account in error. 3. The company depreciates the building at 5% a year and the equipment at 10% a year. Depreciation for 2018 has not yet been recorded. 4. The mortgage payable calls for annual payment of P100,000 on every September 30. Amortizations, including interest at 12% per year, were paid as due. Interest was properly accrued during the year, 5. During the year, the excess of the amount received over the par value of the ordinary shares issued of P40,000 was credited to Retained earnings. No dividends were declared during the year. The retained carnings beginning balance showa credit balance of P70,000. 6. Based on past experience, the company should maintain the allowance for doubtful accounts at 5% of the customer's outstanding balances. Required: 1. Compute for the following: a. 2018 unadjusted net loss b. 2018 adjusted net loss Adiusted tntal neeate C. 0010 ten re
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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