Invested $28,800 cash in exhange for Common Stock 1 Paid cash $28,800 for 12 month insurance policy that money could buy 2 Purchased office equipment for $86,400 on account 10 Billed client $2400 for design work 20 Purchased supplies worth $2400 on account 22 Received $2400 cash from customer for future work 29 Paid cash to creditors $2400 29 Received $2400 cash from customer paying down account. 30 Board of Directors declared and paid cash Dividend $2400 Record Adjusting Entries on Journal Page 3 Dec 31 Supplies on hand at month end $0 31 Office Equipment Depreciates staright line over 3 years 31 Record insurance expense for month end 31 Earned $2400 of Unearned Revenue 31 Billed client for 20 hours design work at $240 per hour 5 Post Adjusting Entries to the General Ledger (GL) 6 Produce the Adjusted Trial Balance 7 Produce an Income Statement, Retained Earnings Statement and Balance Sheet. 8 Record on Journal Page 4 the closing of all temporary accounts directly into Retained Earnings 9 Post to General Ledger (GL) 10 Produce the Post Closing 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.
1 Paid cash $28,800 for 12 month insurance policy that money could buy
2 Purchased office equipment for $86,400 on account
10 Billed client $2400 for design work
20 Purchased supplies worth $2400 on account
22 Received $2400 cash from customer for future work
29 Paid cash to creditors $2400
29 Received $2400 cash from customer paying down account.
30 Board of Directors declared and paid cash Dividend $2400
Dec 31 Supplies on hand at month end $0
31 Office Equipment
31 Record insurance expense for month end
31 Earned $2400 of Unearned Revenue
31 Billed client for 20 hours design work at $240 per hour
5
6 Produce the Adjusted
7 Produce an Income Statement, Retained Earnings Statement and Balance Sheet.
8 Record on Journal Page 4 the closing of all temporary accounts directly into Retained Earnings
9 Post to General Ledger (GL)
10 Produce the Post Closing Trial Balance
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