3.10 Analyse adjusted data.LO3, 4, 5 This is a partial adjusted trial balance of Darcy Designs Pty Ltd. DARCY DESIGNS PTY LTD Adjusted trial balance (partial) as at 31 July 2019 No. Account name Debit Credit 110 Supplies $1 500 112 Prepaid insurance 2 400 212 Salaries payable $1 500 213 Service revenue received in advance 1 125 400 Service revenue 3 000 500 Salaries expense 7 300 505 Supplies expense 1 220 515 Insurance expense 800 Required Answer these questions, assuming the year begins on 1 July: If the amount in supplies expense is the 31 July adjusting entry, and $1320 of supplies was purchased in July, what was the balance in supplies on 1 July? If the amount in insurance expense is the July adjusting entry, and the original insurance premium was for 1 year, what was the total premium and when was the policy purchased? If $7500 of salaries was paid in July, what was the balance in salaries payable at 30 June 2019? There were no additional amounts of revenue received in advance during July. An amount of $2400 was received for services performed in July. What was the amount of service revenue received in advance at 1 July 2019/30 June 2019?
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.
E3.10 Analyse adjusted data.LO3, 4, 5
This is a partial adjusted
|
DARCY DESIGNS PTY LTD |
|||
|
No. |
Account name |
Debit |
Credit |
|
110 |
Supplies |
$1 500 |
|
|
112 |
Prepaid insurance |
2 400 |
|
|
212 |
Salaries payable |
$1 500 |
|
|
213 |
Service revenue received in advance |
1 125 |
|
|
400 |
Service revenue |
3 000 |
|
|
500 |
Salaries expense |
7 300 |
|
|
505 |
Supplies expense |
1 220 |
|
|
515 |
Insurance expense |
800 |
Required
Answer these questions, assuming the year begins on 1 July:
- If the amount in supplies expense is the 31 July
adjusting entry , and $1320 of supplies was purchased in July, what was the balance in supplies on 1 July? - If the amount in insurance expense is the July adjusting entry, and the original insurance premium was for 1 year, what was the total premium and when was the policy purchased?
- If $7500 of salaries was paid in July, what was the balance in salaries payable at 30 June 2019?
- There were no additional amounts of revenue received in advance during July. An amount of $2400 was received for services performed in July. What was the amount of service revenue received in advance at 1 July 2019/30 June 2019?
(Hint: Reconstruct the T accounts to help answer these questions.)
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