a.-b. Merchandise Inventory, before adjustment, has a balance of $6,800. The newly counted inventory balance is $7,300. c. Unearned Seminar Fees has a balance of $5,300, representing prepayment by customers for five seminars to be conducted in June, July, and August 20X1. Two seminars had been conducted by June 30, 20X1. d. Prepaid Insurance has a balance of $7,800 for six months' insurance paid in advance on May 1, 20X1. e. Store equipment costing $17,710 was purchased on March 31, 20X1. It has a salvage value of $430 and a useful life of six years. f. Employees have earned $180 that has not been paid at June 30, 20X1. g. The employer owes the following taxes on wages not paid at June 30, 20X1: SUTA, $5.40; FUTA, $1.08; Medicare, $2.61; and social security, $11.16. h. Management estimates uncollectible accounts expense at 1 percent of sales. This year's sales were $1,300,000. i. Prepaid Rent has a balance of $5,550 for six months' rent paid in advance on March 1, 20X1. j. The Supplies account in the general ledger has a balance of $330. A count of supplies on hand at June 30, 20XX1, indicated $115 of supplies remain. k. The company borrowed $10,000 from Second Bancorp on June 1, 20X1, and issued a four-month note. The note bears interest a 6 percent. Required: Based on the information above, record the adjusting journal entries that must be made for Sufen Consulting on June 30, 20X1. The company has a June 30 fiscal year-end. Analyze: After all adjusting entries have been journalized and posted, what is the balance of the Prepaid Rent account?
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.
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