The following item has been extracted from the ledger of Jonaz Trading for the year ending September 30, 2020. Cash 12,100 Account receivable 27,700 Inventory 1 October 2019 55,200 Supplies 6,200 Machine 120,000 Accumulated Depreciation- Machine 36,000 Lorry 180,000 Accumulated Depreciation- Lorry 72,000 Notes Payable 40,000 Account payable 48,500 Loan 56,000 Owner’s Capital 88,000 Drawings 5,000 Sales 758,800 Sales Return and Allowances 15,800 Purchases 489,200 Purchase returns and Allowances 16,500 Salaries and Wages Expense 136,000 Advertising Expense 22,100 Utilities Expense 14,000 Maintenance and Repair Expense 12,100 Rent Expense 18,000 Prepaid Insurance 2,400 Additional information as at 30 September 2020: • Stock on 30 September 2020 was valued at RM70,000. • Supplies on hand at 30 September 2020 total RM540 • Invoice representing RM7,500 sales in September has not been recorded. • The insurance policy is for a year ending 30 April 2021. • Machine and lorry were depreciated at 10% of the cost each year. You are required to: a) Prepare the necessary adjusting entries in the general journal. b) Prepare the income statement for Jonaz for the year ended 30 September 2020.
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 item has been extracted from the ledger of Jonaz Trading for the year ending September 30, 2020.
Cash 12,100
Account receivable 27,700
Inventory 1 October 2019 55,200
Supplies 6,200
Machine 120,000
Lorry 180,000
Accumulated Depreciation- Lorry 72,000
Notes Payable 40,000
Account payable 48,500
Loan 56,000
Owner’s Capital 88,000
Drawings 5,000
Sales 758,800
Sales Return and Allowances 15,800
Purchases 489,200
Purchase returns and Allowances 16,500
Salaries and Wages Expense 136,000
Advertising Expense 22,100
Utilities Expense 14,000
Maintenance and Repair Expense 12,100
Rent Expense 18,000
Prepaid Insurance 2,400
Additional information as at 30 September 2020:
• Stock on 30 September 2020 was valued at RM70,000.
• Supplies on hand at 30 September 2020 total RM540
• Invoice representing RM7,500 sales in September has not been recorded.
• The insurance policy is for a year ending 30 April 2021.
• Machine and lorry were depreciated at 10% of the cost each year.
You are required to:
a) Prepare the necessary
b) Prepare the income statement for Jonaz for the year ended 30 September 2020.
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