24 Paid the shop assistant for the one week salary, P3,600. 25 Cash service income for the week, P8,700. 25 Paid Kakuna Japan Surplus in full. 26 Give the shop assistant a short-term loan of P2,000. Term: 30 days. 27 Traynor brought home some shop supplies worth P1,300, for her personal use. 28 Bought additional furniture worth P6,500 from TeamRocket Depot. Term: 30 days. 28 Billings for newly delivered orders: Brock Enroll for P3,000, Misty LavahLavah for P1,600. Additional information as of February 28, 2015 are as follows: a. Out of the balance of the shop tools account, 70% is to be treated as an expense. b. Depreciations of Sewing Equipment, with an estimated useful life of 5 years and no residual value, and Furniture and Fixtures, with an estimated useful life of 5 years and no residual value, are computed with the use of the straight line method. For the purpose of computing for the depreciation, the business decided to adopt the following policy: fixed assets acquired n the first half of the month (February 1-14) are depreciated for a full month; fixed assets acquired in the second half of the month are depreciated beginning the following month. C. Accrued expenses at the end of the month: Salaries, P3,600 Utilities, P2,700 d. Prepaid expenses at the end of the period. Supplies, P2,100 Rent, ? e. Half of the dresses ordered by Dawn E. Labadabango were already delivered. f. Income earned but not yet collected, P3,700. E 5% of the unadjusted balance of accounts receivable is doubtful of collection.
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.
Required: INCOME STATEMENT for the month ended February 28, 2015
Step by step
Solved in 2 steps with 1 images
