Corrected Trial Balance The Colby Group has the following unadjusted trial balance as of August 31, 20Y8. The Colby Group Unadjusted Trial Balance August 31, 20Y8 Debit Balances Credit Balances Cash 19,180 Accounts Receivable 34,330 Supplies 4,510 Prepaid Insurance 4,850 Equipment 000'60 <> Notes Payable Accounts Payable 9,740 Terry Colby, Capital 70,010 Terry Colby, Drawing Fees Earned 359,400 Wages Expense 212,332 Rent Expense 000' Advertising Expense 15,400 Miscellaneous Expense 11,500 476,902 484,450 The debit and credit totals are not equal as a result of the following errors: a. The balance of cash was overstated by $10,000. b. A cash receipt of $5,200 was posted as a debit to Cash of $2,500. C. A debit of $3,500 to Accounts Receivable was not posted. d. A return of $879 of defective supplies was erroneously posted as a $897 credit to Supplies. e. An insurance policy acquired at a cost of $800 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by $9,000. g. A credit of $1,460 in Accounts Payable was overlooked when determining the balance of the account. h. A debit of $2,500 for a withdrawal by the owner was posted as a debit to Terry Colby, Capital. i. The balance of $14,500 in Advertising Expense was entered as $15,400 in the trial balance. j. Gas, Electricity, and Water Expense, with a balance of $3,090, was omitted from the trial balance. Required: 1. Prepare a corrected unadjusted trial balance as of August 31, 20Y8. If an amount box does not require an entry, leave it blank. The Colby Group Unadjusted Trial Balance August 31, 20Y8 Debit Credit Balances Balances Cash 15,150 Accounts Receivable Check My Work All work saved. The Colby Group Unadjusted Trial Balance August 31, 20Y8 Credit Balances Debit Balances Cash 15,150 0. Accounts Receivable Supplies Prepaid Insurance Equipment Notes Payable Accounts Payable Terry Colby, Capital <> Terry Colby, Drawing Fees Earned Wages Expense Rent Expense Advertising Expense Gas, Electricity, and Water Expense Miscellaneous Expense Feedback Check My Work 1. Identify which accounts are affected by the error. Add each correction to or subtract each correction from the corresponding account. Finally, re-total the corrections for each error. Remember the trial balance column totals should be equal. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts? Feedback Check My Work 2. The trial balance lists the account balances of all the ledger accounts and sums all of the debit balances and all of the credit balances. Feedback Check My WNork Partially correct Check My Work All work saved.
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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