Breeze Inc. is an event company. Below is a Balance Sheet of Breeze Inc. as of April 30, 2018: Gamma Inc. Balance Sheet 30.04.18 Cash Notes Receivable Office Equipment Musical Equipment Assets Total Assets The following transactions occurred during May 2018: 1. 01.05 2. 04.05 3. 07.05 4. 12.05 month 7. 8. 9. 19,418 12,700 3,100 27,900 31.05 31.05 63.118 Liabilities Utilities Payable Accounts Payable Total Liabilities: Owner's Equity Capital Stock Retained Earnings 5. 15.05 Received $12,000 from Delta Co. for the corporate event to be conducted in September 2018; 6. 20.05 Conducted an opening party for a shopping mall. The shopping mall will pay the agreed amount of $18,000 by June 5, 2018; 24.05 Collected notes receivable in the amount $4,000; Paid $3,200 of office rent for June and July 2018; Salaries of employees for May were paid in the amount of $8,000. 200 11,768 11,968 21,600 29.550 Total Owner's Equity 51,150 Total Liabilities & Owner's 63,118 Purchased stationery for $140 on credit. This amount is due by June 15, 2018; Conducted a wedding party and received $8,000 cash; Paid all debt on utilities; Purchased additional office equipment for $2,400. Paid $1,000 cash and the balance will be paid within two Required: based on information provided, prepare: 1. Journal entries in the General Journal of Breeze Inc., for May 2018; 2. Ledger of Breeze Inc., with effect of May 2018 transactions.
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.
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