Apr 02 Cash 38,000 Computer equipment 11,400 Common stock 49,400 2 Apr 03 Rent expense 2,600 Cash 2,600 3 Apr 04 Office supplies 1,200 Cash 1,200 4 Apr 10 Prepaid insurance 1,800 Cash 1,800 5 Apr 14 Salaries expense 1,540 Cash 1,540 6 Apr 24 Cash 24,000 Commissions revenue 24,000 7 Apr 28 Salaries expense 1,540 Cash 1,540 8 Apr 29 Repairs expense 650 Cash 650 9 Apr 30 Telephone expense 400 Cash 400 10 Apr 30 Dividends 1,700 Cash 1,700 11 Apr 30 Insurance expense 100 Prepaid insurance 100 12 Apr 30 Office supplies expense 600 Office supplies 600 13 Apr 30 Depreciation expense - Computer equipment 190 Accumulated depreciation - Computer equipment 190 14 Apr 30 Salaries expense 616 Salaries payable 616 15 Apr 30 Accounts receivable 1,830 Commissions revenue 1,830 Record the entry to close the revenue account(s). Record the entry to close the expense account(s). Record the entry to close Income summary. Record the entry to close the owner's withdrawals account.
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.
| Apr 02 | Cash | 38,000 | ||
| Computer equipment | 11,400 | |||
| Common stock | 49,400 | |||
| 2 | Apr 03 | Rent expense | 2,600 | |
| Cash | 2,600 | |||
| 3 | Apr 04 | Office supplies | 1,200 | |
| Cash | 1,200 | |||
| 4 | Apr 10 | Prepaid insurance | 1,800 | |
| Cash | 1,800 | |||
| 5 | Apr 14 | Salaries expense | 1,540 | |
| Cash | 1,540 | |||
| 6 | Apr 24 | Cash | 24,000 | |
| Commissions revenue | 24,000 | |||
| 7 | Apr 28 | Salaries expense | 1,540 | |
| Cash | 1,540 | |||
| 8 | Apr 29 | Repairs expense | 650 | |
| Cash | 650 | |||
| 9 | Apr 30 | Telephone expense | 400 | |
| Cash | 400 | |||
| 10 | Apr 30 | Dividends | 1,700 | |
| Cash | 1,700 | |||
| 11 | Apr 30 | Insurance expense | 100 | |
| Prepaid insurance | 100 | |||
| 12 | Apr 30 | Office supplies expense | 600 | |
| Office supplies | 600 | |||
| 13 | Apr 30 | 190 | ||
| 190 | ||||
| 14 | Apr 30 | Salaries expense | 616 | |
| Salaries payable | 616 | |||
| 15 | Apr 30 | 1,830 | ||
| Commissions revenue | 1,830 |
Record the entry to close the revenue account(s).
Record the entry to close the expense account(s).
Record the entry to close Income summary.
Record the entry to close the owner's withdrawals account.
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