21. The following list of accounts and their balances appear on the books of MJ Thai Spa as of December 31, 2018: Cash Accounts Receivable Allowance for Bad Debts Notes Receivable Unexpired Insurance Furniture & Fixtures Accumulated Depn. - Furniture Equipment Accumulated Depn. - Equipment Accounts Payable Notes Payable Unearned Commissions Jay, Capital Jay, Personal P 58,850 Mel, Capital 32,400 Membership Fee 2,500 19,000 Advertising Expense 2,575 238,000 5,950 432,000 21,600 Store Supplies Expense 15,000 50,000 600 60,000 3,600 40,000 945,900 1,530,500 300,160 108,970 644,000 346,000 150,000 3,400 2,090 310,850 10,610 5,455 15,000 Service Fee Income Taxes and Licenses Rent Sales Salaries Office Salaries Office Supplies Expense Utilities Expense Interest Expense Interest Income Loss on Foreign Exchange Partnership agreement calls for the following: Monthly salary allowance of P5,000 for Mel and P7,500 for Jay, 12% interest on capital balances, and residual profit to be shared equally. Additional information were given to adjust the books: a) Provision for bad debts should be 10% of the outstanding accounts receivable. b) Office Furniture and Fixtures were acquired July 1, 2017 and the Delivery Equipment were acquired January 1, 2017. Depreciation rate is the same for both assets. c) One half of the unearned commission is already earned. d) Prepaid insurance on the delivery equipment is payable annually starting May 1. e) P10,000 of the notes receivable is interest bearing at 18% dated December 1, 2018 and due after 60 days. f) The note payable was issued to the bank and discounted at 18% for a year on December 1, 2018. The discount was charged to interest expense. g) Tax rate is 30%. Direction: Prenare a 10-column worksheet with a profit distribution table.
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.
22.
a. Prepare the
b. Close the nominal accounts
c. Record the 30% tax liability
d. Make a statement of comprehensive income under the function of expense method and use line items with supporting notes. Rent and utilities are 75% distribution expenses.
e. Make a statement of partner's equity. Mel Capital was initially P80,000 before she made a permanent withdrawal.
f. Make a
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