Accounts Debit Credit $ 11,700 35,000 152,500 72,300 125,000 Cash Accounts Receivable Inventory Land Buildings Allowance for Uncollectible Accounts Accumulated Depreciation Accounts Payable Common Stock Retained Earnings $ 2, 300 10,100 23, 200 205,000 155,900 Totals $396,500 $396, 500 During January 2021, the following transactions occur: January Borrow $105,000 from Captive Credit Corporation. The installment note bears interest at 6% annually and matures in 5 years. Payments of $2,030 are required at the end of each month for 60 months. 1 January Receive $31,500 from customers on accounts receivable. 4 January Pay cash on accounts payable, $16, 000. 10 Pay cash for salaries, $29,400. January 15 January Firework sales for the month total $196,000. Sales include $65, 500 for cash and $130, 500 on account. The cost 30 of the units sold is $115,000. January Pay the first monthly installment of $2,030 related to the $105,000 borrowed on January 1. Round your 31 interest calculation to the nearest dollar. rcise 9-21 Part 3 epare an adjusted trial balance as of January 31, 2021.
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.
![Required information
Exercise 9-21 Complete the accounting cycle using long-term liability transactions (LO9-2, 9-8)
[The following information applies to the questions displayed below.]
On January 1, 2021, the general ledger of Freedom Fireworks includes the following account balances:
Debit
$ 11,700
35,000
152,500
72,300
125,000
Accounts
Credit
Cash
Accounts Receivable
Inventory
Land
Buildings
$ 2,300
10, 100
23, 200
205,000
155,900
Allowance for Uncollectible Accounts
Accumulated Depreciation
Accounts Payable
Common Stock
Retained Earnings
Totals
$396,500
$396,500
During January 2021, the following transactions occur:
Borrow $105, 000 from Captive Credit Corporation. The installment note bears interest at 6% annually and
matures in 5 years. Payments
Receive $31, 500 from customers on accounts receivable.
January
$2,030 are required at the end of ead
onth for 6e months.
January
4
January
Pay cash on accounts payable, $16,000.
10
January
Pay cash for salaries, $29,400.
15
January
Firework sales for the month total $196,000. Sales include $65,500 for cash and $130, 500 on account. The cost
of the units sold is $115,000.
30
Pay the first monthly installment of $2,030 related to the $105,000 borrowed on January 1. Round your
interest calculation to the nearest dollar.
January
31
Exercise 9-21 Part 3
3. Prepare an adjusted trial balance as of January 31, 2021.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F06485a1e-133d-4c3c-bb98-7255c1ebbbed%2Fe6021639-e0dc-49fc-9f12-6214302d1ef9%2Fbuw7f2_processed.png&w=3840&q=75)
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