Errors а. Cash is understated by $1,300. b. A $4,900 debit to Accounts Receivable was posted as a credit. A$1,300 purchase of office supplies on account was neither journalized nor posted. с. d. Equipment was incorrectly transferred from the ledger as $88,000. It should have been transferred as $80,500. е. Salaries Expense is overstated by $300. $400 cash payment for advertising expense was neither journalized nor posted. Print Done Trial balance August 31, 2024 Balance Account Title Debit Credit Cash 8,420 Accounts Receivable 5,000 Office Supplies 1,200 Prepaid Insurance 1,400 Equipment 88,000 Accounts Payable 2,600 Notes Payable 47,000 Tarrago, Capital 52,300 Tarrago, Withdrawals 3,880 Service Revenue 11,800 Salaries Expense 3,800 1,100 Rent Expense $ 112,800 $ 113,700 Total Print Done
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.
![Errors
а.
Cash is understated by $1,300.
b.
A $4,900 debit to Accounts Receivable was posted as a credit.
A$1,300 purchase of office supplies on account was neither journalized nor
posted.
с.
d. Equipment was incorrectly transferred from the ledger as $88,000. It should
have been transferred as $80,500.
е.
Salaries Expense is overstated by $300.
$400 cash payment for advertising expense was neither journalized nor
posted.
Print
Done](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F794645c1-150b-4cc8-932b-51196d5b7015%2F6c644494-361c-481a-965e-13565c1c8b47%2Fqvit5uh_processed.png&w=3840&q=75)
![Trial balance
August 31, 2024
Balance
Account Title
Debit
Credit
Cash
8,420
Accounts Receivable
5,000
Office Supplies
1,200
Prepaid Insurance
1,400
Equipment
88,000
Accounts Payable
2,600
Notes Payable
47,000
Tarrago, Capital
52,300
Tarrago, Withdrawals
3,880
Service Revenue
11,800
Salaries Expense
3,800
1,100
Rent Expense
$
112,800 $
113,700
Total
Print
Done](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F794645c1-150b-4cc8-932b-51196d5b7015%2F6c644494-361c-481a-965e-13565c1c8b47%2Fomdlp9a_processed.png&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)
![Intermediate Accounting: Reporting And Analysis](https://www.bartleby.com/isbn_cover_images/9781337788281/9781337788281_smallCoverImage.jpg)
![Survey of Accounting (Accounting I)](https://www.bartleby.com/isbn_cover_images/9781305961883/9781305961883_smallCoverImage.gif)