7 From the give trial balance prenare adiusting iournal ontries at the end of the vear:
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.
![7. From the give trial balance, prepare adjusting journal entries at the end of the year:
Maria Cristina Pascua, CPA
Trial balance
December 31, 2017
DEBIT
CREDIT
53,000
85,000
35,000
Cash
Accounts receivable
Furniture & fixture
Accounts payable
Pascua, Capital
27,000
165,000
56,000
Service Income
Salaries Expense
75,000
a. Cash collected from a customer's account in the amount of P10,000 was not recorded in the
book. This covered by Official receipt No. 0521 dated December 31, 2017.
Debit;
Credit;
b. Payment of account to a supplier in the amount of P15,000 was not recorded. This is
covered by check No. 00751 as per check stub on file.
Debit;
Credit;
c. Cash withdrawal of the owner amounting to P5,000 was erroneously charged to Salaries
Expense.
Debit;
Credit;
d. Furniture and fixtures was acquired on March 31, 2017 with an estimated life of 5 years with
a residual value of P5,000 at the end of its life.
Debit;
Credit;
e. Provision for doubtful accounts are estimated to be at 1.5 % of the account receivable.
Debit;
Credit;
How much is the total asset after adjustment?
How much is total liabilities after adjustment?
How much the owner's equity after adjustment?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F44d8d161-ee02-4c74-910e-7bb2e8233d7e%2Fd5e37e0e-8969-4226-aa99-3572d06ad8b5%2Fgccnxsb_processed.jpeg&w=3840&q=75)
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