Based on the given information below, prepare the following: 1. Statement of Income 2. Statement of Changes in Owner's Equity Happy Valley Worksheet (Unadjusted to Adjusted TB omitted) For the month ended March 31, 2021 Statement of Income Statement of Financial Position Dr Cr Dr Cr Cash on Hand 87,904.00 Cash in Bank 2,114,640.00 Accounts Receivable 35,000.00 Allowance for Bad Debts 1,750.00 Notes Receivable 4,000.00 Interest Receivable 40.00 Amusement Rides 2,400,000.00 Accumulated Depreciation - Amusement Rides 18,000.00 Electronic Equipment 80,896.00 Accumulated Depreciation - Electronic Equipment 2,136.00 Furniture and Fixtures 24,000.00 Accumulated Depreciation - Furniture and Fixtures 360.00 Accounts Payable 15,400.00 Notes Payable 80,000.00 Interest Payable 1,600.00 SS Premiums Payable 2,880.00 EC Premiums Payable 64.00 Philhealth Premiums Payable 1,280.00 Pag-Ibig Premiums Payable 960.00 Withholding Taxes Payable 3,760.00 Utilities Payable 2,400.00 Mortgage Payable 400,000.00 Masaya, Capital 4,200,000.00 Masaya, Drawing 7,500.00 Ticket Sales 44,960.00 Rental Income 89,600.00 Interest Income 40.00 Advertising Expense 16,000.00 Salaries Expense 48,000.00 EC Premium Expense 64.00 Pag-Ibig Premium Expense 480.00 Philhealth Premium Expense 640.00 SS Premium Expense 1,920.00 Rent Expense 8,000.00 Taxes and Licenses Expense 1,460.00 Utility Expense 10,800.00 Interest Expense 1,600.00 Bad Debts Expense 1,750.00 Depreciation Expense 20,496.00 Total 111,210.00 134,600.00 4,753,980.00 4,730,590.00 Net Income 23,390.00 23,390.00 Total 134,600.00 134,600.00 4,753,980.00 4,753,980.00 Additional Information: This is the company's 1st month of operations. The Notes Receivable is a 90-day note. The Notes Payable is a 1-year note maturing March 18, 2021. It was issued to acquire the Electronic Equipment. The Mortgage Payable matures on March 3, 2026. The Furniture and Fixtures was acquired by paying cash of P8,600 and the balance on the account (Accounts Payable of P15,400) GENERAL LEDGER CASH ON HAND 101 Date f Dr Date f Cr Mar 1 GJ1 Investment 50,000.00 Mar 3 GJ1 Payment for freight on Equipment 896.00 12 Collection of account: Wesleyan University 10,000.00 10 Payment for billboard ads 16,000.00 13 GJ2 Collection of account: International School 10,000.00 15 GJ2 Transfer to Cash in Bank 39,300.00 14 Cash receipts from customers 2,560.00 24 GJ3 Taxes and Licenses 1,460.00 17 Cash receipts from customers 20,000.00 18 Collection of account: St. Michael College 7,000.00 20 Collection of account: International School 3,000.00 26 Collection of account: St. Michael College 10,000.00 27 Collection of account: Wesleyan University 6,000.00 30 Cash receipts from customers 27,000.00 145,560.00 57,656.00 87,904.00 CASH IN BANK 102 Date f Dr Date f Cr Mar 1 GJ1 investment 3,950,000.00 Mar 1 GJ1 Purchase of Amusement rides 2,000,000.00 3 investment 200,000.00 10 Purchase of Furniture and Fixtures 8,600.00 15 GJ2 Transfer from Cash on Hand 39,300.00 16 GJ2 Payment for Salaries 21,920.00 25 GJ3 Payment for Utilities 8,400.00 28 Payment for Rent 8,000.00 31 Payment for Salaries 20,240.00 31 Withdrawal 7,500.00 4,189,300.00 2,074,660.00 2,114,640.00 MASAYA, CAPITAL 501 Date f Dr Date f Cr Mar 1 GJ1 4,000,000 3 200,000 4,200,000
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.
Based on the given information below, prepare the following: | |
1. Statement of Income | |
2. Statement of Changes in Owner's Equity |
Happy Valley |
Worksheet (Unadjusted to Adjusted TB omitted) |
For the month ended March 31, 2021 |
Statement of Income | |
|||
Dr | Cr | Dr | Cr | |
Cash on Hand | 87,904.00 | |||
Cash in Bank | 2,114,640.00 | |||
35,000.00 | ||||
Allowance for |
1,750.00 | |||
Notes Receivable | 4,000.00 | |||
Interest Receivable | 40.00 | |||
Amusement Rides | 2,400,000.00 | |||
18,000.00 | ||||
Electronic Equipment | 80,896.00 | |||
Accumulated Depreciation - Electronic Equipment | 2,136.00 | |||
Furniture and Fixtures | 24,000.00 | |||
Accumulated Depreciation - Furniture and Fixtures | 360.00 | |||
Accounts Payable | 15,400.00 | |||
Notes Payable | 80,000.00 | |||
Interest Payable | 1,600.00 | |||
SS Premiums Payable | 2,880.00 | |||
EC Premiums Payable | 64.00 | |||
Philhealth Premiums Payable | 1,280.00 | |||
Pag-Ibig Premiums Payable | 960.00 | |||
Withholding Taxes Payable | 3,760.00 | |||
Utilities Payable | 2,400.00 | |||
Mortgage Payable | 400,000.00 | |||
Masaya, Capital | 4,200,000.00 | |||
Masaya, Drawing | 7,500.00 | |||
Ticket Sales | 44,960.00 | |||
Rental Income | 89,600.00 | |||
Interest Income | 40.00 | |||
Advertising Expense | 16,000.00 | |||
Salaries Expense | 48,000.00 | |||
EC Premium Expense | 64.00 | |||
Pag-Ibig Premium Expense | 480.00 | |||
Philhealth Premium Expense | 640.00 | |||
SS Premium Expense | 1,920.00 | |||
Rent Expense | 8,000.00 | |||
Taxes and Licenses Expense | 1,460.00 | |||
Utility Expense | 10,800.00 | |||
Interest Expense | 1,600.00 | |||
Bad Debts Expense | 1,750.00 | |||
Depreciation Expense | 20,496.00 | |||
Total | 111,210.00 | 134,600.00 | 4,753,980.00 | 4,730,590.00 |
Net Income | 23,390.00 | 23,390.00 | ||
Total | 134,600.00 | 134,600.00 | 4,753,980.00 | 4,753,980.00 |
Additional Information: |
This is the company's 1st month of operations. |
The Notes Receivable is a 90-day note. |
The Notes Payable is a 1-year note maturing March 18, 2021. It was issued to acquire the Electronic Equipment. |
The Mortgage Payable matures on March 3, 2026. |
The Furniture and Fixtures was acquired by paying cash of P8,600 and the balance on the account (Accounts Payable of P15,400) |
GENERAL LEDGER
CASH ON HAND | 101 | ||||||
Date | f | Dr | Date | f | Cr | ||
Mar 1 | GJ1 | Investment | 50,000.00 | Mar 3 | GJ1 | Payment for freight on Equipment | 896.00 |
12 | Collection of account: Wesleyan University | 10,000.00 | 10 | Payment for billboard ads | 16,000.00 | ||
13 | GJ2 | Collection of account: International School | 10,000.00 | 15 | GJ2 | Transfer to Cash in Bank | 39,300.00 |
14 | Cash receipts from customers | 2,560.00 | 24 | GJ3 | Taxes and Licenses | 1,460.00 | |
17 | Cash receipts from customers | 20,000.00 | |||||
18 | Collection of account: St. Michael College | 7,000.00 | |||||
20 | Collection of account: International School | 3,000.00 | |||||
26 | Collection of account: St. Michael College | 10,000.00 | |||||
27 | Collection of account: Wesleyan University | 6,000.00 | |||||
30 | Cash receipts from customers | 27,000.00 | |||||
145,560.00 | 57,656.00 | ||||||
87,904.00 |
CASH IN BANK | 102 | ||||||
Date | f | Dr | Date | f | Cr | ||
Mar 1 | GJ1 | investment | 3,950,000.00 | Mar 1 | GJ1 | Purchase of Amusement rides | 2,000,000.00 |
3 | investment | 200,000.00 | 10 | Purchase of Furniture and Fixtures | 8,600.00 | ||
15 | GJ2 | Transfer from Cash on Hand | 39,300.00 | 16 | GJ2 | Payment for Salaries | 21,920.00 |
25 | GJ3 | Payment for Utilities | 8,400.00 | ||||
28 | Payment for Rent | 8,000.00 | |||||
31 | Payment for Salaries | 20,240.00 | |||||
31 | Withdrawal | 7,500.00 | |||||
4,189,300.00 | 2,074,660.00 | ||||||
2,114,640.00 | |||||||
MASAYA, CAPITAL | 501 | ||||||
Date | f | Dr | Date | f | Cr | ||
Mar 1 | GJ1 | 4,000,000 | |||||
3 | 200,000 | ||||||
4,200,000 |
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