As part of your audit of receivables of Jasmin Corporation, you performed a cut-off test of sales. Results of the cut-off test revealed the following: Recorded as Sales in December 31, 2021 Invoice Selling Shipment Date Received by Cost Terms No. Price customers 123 P18,000 P16,500 | FOB Shipping 12/26/2021 12/29/2021 Point 12,500 8,680 14,200 10,200 | FOB Destination 7,240 FOB Destination 12,500 Shipped consignee 7,500 FOB 124 12/26/2021 12/29/2021 125 12/28/2021 01/02/2022 126 to 12/29/2021 01/02/2022 127 9,000 Shipping 12/30/2021 01/02/2022 Point 7,750 FOB Destination 6,100| FOB Point 128 10,000 7,800 12/31/2021 Shipping 12/31/2021 01/03/2022 01/02/2022 129 01/02/2022 12,000 Shipped consignee 130 14,000 to 12/31/2021 Recorded Sales in January 2022 Selling Price Invoice Received by Shipment Date Cost Terms No. customers P21,000 P18,200 FOB Point Shipping 12/31/2021 131 01/03/2022 8,800 FOB Destination 3,200 FOB Destination 5,000 | FOB 132 12/30/2021 01/03/2022 10,500 4,500 6,500 133 01/02/2022 01/03/2022 134 Shipping 01/02/2022 01/05/2022 Point A count of all inventories within the premises was made in the afternoon of December 30, 2021 (after deliveries were made for the day). The total cost of the count was recorded as inventories as of December 31, 2021. The goods shipped to consignees are still unsold at December 31. The unadjusted ledger balances show the following: 842,000 1,320,000 425,000 276,500 Cost of sales P Sales Inventories Accounts receivables
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.
Determine the adjusted balances of the following:
1.
2. Inventories
3. Sales
4. Cost of Sales
5. Effect of errors to net income
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