ABC Trading & Service Co. Ltd., established in 2010, specializes in trading product X in mobile phone. The company uses a perpetual inventory system, first-in-first-out (FIFO), and straight-line depreciation. Beginning balance of accounts in May 1, 2023 are listed as follow / Accounts/ Amount / (VND) 800,000,000 Cash/ Notes payable/ Accounts receivable/ Accounts payable/ Equipment/ 5,000,000,000 100,000,000 19,000,000,000 30,000,000,000 Merchandise inventories/ Units / 1,000 units X; unit price Owner's Capital/ Accumulated Depreciation/ 30,000,000 The following are transactions incurred in May 2023. On May 1, NGUYEN KIM Company had 1,000 units of product X (Merchandise inventory) on hand, at a cost of 30,000,000VND each. All purchases and sales are on account. A record of inventory transactions for the month of May for the company is as follows: May 5, purchased 5,000 units 32,000,000 VND per May 10, sold 4,000 units @ 45,000,000 VND per unit May 16 purchased 4,500 units @ 35,000,000VNDper unit 30,000,000,000 36.870,000,000 May 20 sold 5,000 units 53,000,000 VND per May 29 purchased 3,500 units @34,000,000 VND per unit On May 1, hired an employee to start working the following month 1. On May 7, collected cash from the customer for the beginning Accounts receivable, 120,000,000 VND 2. On May 7, paid cash to rent a conference hall for a customer event of 30,000,000 VND. 3. On May 12, paid cash to the supplier for the beginning A/P. 500,000,000 VND 4. On May 18, the owner invested in the business 900,000,000 VND cash. 5. On May 20, paid cash for utility expenses (electronic, water, telephone) at the administration division of 100,000,000 VND. 6. On May 28, the company was considering signing a sale contract to sell merchandise to client C according to the delivery method to FOB destination: 500 units x 40,000,000 VND per unit. 7. On May 30, paid salaries for all departements of 110,000,000 VND. 8. On May 30, accrued depreciation expense of 65,000,000 VND. 9. On May 30, paid 10,000,000 VND cash for loan interest. The loan interest paid monthly. 10. On May 31, paid in purchasing equipment: invoice price, 200,000,000VND; shipping. 30,000,000 VND; installation and testing. 50,000,000VND, one-year insurance policy, vnd 12,000,000VND. On May 31, Determine the profit after tax. Assume that a corporate income tax rate is 20%. Requirments: 1. Prepare a tabular analysis of the effects of the above transactions from 1 to May 30 on the accounting equation 2. Record the above transactions to the General Journal.
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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