A/C Name Belvidere Pharmaceuticals F-Town Division Trial Balance as of December 31, 2021 Cash Accounts receivable Allowance for bad debt Other debtors Merchandise Inventory Store Supplies Prepaid Insurance Prepaid rent Furniture & Equipment Accumulated deprecation-Furniture and equipment Motor Car Accumulated depreciation- Motor Car Accounts payable Salary payable Interest payable Unearned Sales revenue Note Payable, long term Patty Patterson, Capital Withdrawals Sales revenue Sales discount Sales returns and allowances Cost of goods sold Salaries expense Insurance Expense Utilities Expense Rent Expense Depreciation Expense - Furniture and Equipment Depreciation Expense - Motor Car Store Supplies Expense Gain/loss on Disposal of Fixed Asset Bad-Debt Expense Interest Expense Trial Balance DR 2,850,000 8,000,000 8,000,000 1,800,000 4,200,000 3,850,000 16,000,000 3,600,000 150,000 1,250,000 1,525,000 10,500,000 12,500,000 1,250,000 3,850,000 CR 710,100 6,320,000 2,656,282 1,650,050 2,800,000 8,000,000 24,500,000 32,688,568 79,325,000 79,325,000
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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02%20Assignment%202%20Question.pdf
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The following additional information is available December 31, 2021:
1) Store Supplies on hand on December 31, 2021, amounted to $1,500,000.
2) Insurance of $4,200,000 was paid on January 1, 2021, for the 14-months to February 28,
2022
Other data:
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3) Prepaid rent expired December 31, 2021, amounted to $2,750,000
4) The furniture and equipment have an estimated useful life of 10 years and is being depreciated
on the straight-line method down to a residual value of $200,000.
5) The Motor Car cost relates to two Sosa cals purchased for $1,800,000 each by the company on
January 1, 2015. The double-declining balance method of depreciation is used to compute the car's
depreciation charges and their expected useful life is 10 years or 100,000 miles. In 2015, 10,000
miles were driven, 16,500 in 2016, 12,600 in 2017, 16,000 in 2018, 16,500 in 2019, 14,800 in
2020 and 16,800 in 2021. The residual value on both car is $241,592 each. On September 1,
2021, the company sold one of the cars to ZM Company for $720,000 on credit. Round off
answers to the nearest dollar.
6)
Salaries earned by employees and not yet paid amounted to $65,000 on Dec 31, 2021.
7) Accrued interest expense as of December 31, 2021, $65,000.
8)
On Dec 31, 2021, $2,500,000 of the previously unearned sales revenue had been earned.
9) The aging of the Accounts Receivable schedule on Dec 31, 2021, indicated that the Allowance
for Bad Debts should be $800,000
10) A physical count of inventory was done on December 31, 2021, after making all the other
adjustments and this revealed that there was $7,850,000 worth of inventory on hand at this
point.
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11) The business is expected to make principal payments totalling $1,450,000 towards the loan
during the fiscal year to December 31, 2022.
Required:
a) Prepare the necessary adjusting journal entries on Dec 31, 2021. [Narrations are not required]
b) Prepare the Adjusted Trial balance for the period ending December 31, 2021.
c) Using the Adjusted trial balance, generate the statements requested by Belvidere Pharmaceutical
F-Town Division, i.e.
A Multiple-step income statement & a Statement of owner's equity for the year ended
December 31, 2021
A Classified balance sheet, in report format, at December 31, 2021.
ACCT1002 - Introduction to Financial Accounting Assignment # 2
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