Analyze the business transactions using the tabular flow (A=L+C), Find the new balances after each transaction, Foot rule all transactions at the end of the period Prepare financial statements: Income Statement, Capital Statement, Balance Sheet and Statement of Cash Flows for Vivian Harris company for the period January 31, 2018 On December 1, 2018, Vivian Harris started a business which performs a consulting services for clients. She invested on December 1, $30,000 cash in the business and deposited the cash in a bank account. December 2, Vivian Harris purchase supplies for $2,500 cash to effectively run her consulting firm recently established. December 3, Vivian Harris purchased equipment for $26,000 cash to set up her new firm. December 4, Vivian Harris purchased on account additional supplies of 7,100 for her consulting firm. December 5, Vivian Harris provided her first consulting service to a client and collected $4,200 cash. December 6, Vivian Harris paid rent for $1,000 and also paid the biweekly salary for only employee for $700. December 7, Vivian Harris provided consulting services and billed the client for $1,600. Also, the business rented a facility and billed the client for $300. December 15, the client paid Vivian Harris $1,900 after 12days for consulting service provided on December 7. December 16, Vivian Harris made partial payment of $900 to the supplier for supplies taken on December 4. December 20, Vivian Harris withdrew $200 cash for personal use
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.
- Analyze the business transactions using the tabular flow (A=L+C), Find the new balances after each transaction, Foot rule all transactions at the end of the period
- Prepare financial statements: Income Statement, Capital Statement,
Balance Sheet and Statement ofCash Flows for Vivian Harris company for the period January 31, 2018
On December 1, 2018, Vivian Harris started a business which performs a consulting services for clients. She invested on December 1, $30,000 cash in the business and deposited the cash in a bank account. December 2, Vivian Harris purchase supplies for $2,500 cash to effectively run her consulting firm recently established. December 3, Vivian Harris purchased equipment for $26,000 cash to set up her new firm. December 4, Vivian Harris purchased on account additional supplies of 7,100 for her consulting firm. December 5, Vivian Harris provided her first consulting service to a client and collected $4,200 cash. December 6, Vivian Harris paid rent for $1,000 and also paid the biweekly salary for only employee for $700. December 7, Vivian Harris provided consulting services and billed the client for $1,600. Also, the business rented a facility and billed the client for $300. December 15, the client paid Vivian Harris $1,900 after 12days for consulting service provided on December 7. December 16, Vivian Harris made partial payment of $900 to the supplier for supplies taken on December 4. December 20, Vivian Harris withdrew $200 cash for personal use
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