Chart of Accounts Cash Accounts Receivable Supplies Inventory Prepaid Insurance Prepaid Rent Office Equipment Accounts Payable Notes Payable in. Unearned Revenue Common Stock Retained Earnings Dividends Fees Earned Sales Accumulated Depreciation Insurance Expense Cost of Goods Sold Depreciation Expense Rent Expense Supplies Expense Utility Expense Wages Expense M4 Engineering began operations in January of 2020. M4 Engineering provides structural engineering services to local these parks. Listed below are some transaction from the first quarter of 2020. Prepare the Journal Entries, update T-accounts, and prepare the TB. A. On January 1, the owners deposited $200,000 into the business bank account in exchange for Common Stock. B. On January 2, M4 Engineering signed a 1-year lease for an office building in Long Beach. The owner required the rent for the year be paid in advance. M4 Engineering gave the landlord a check for $30,000. C. On January 5, M4 Engineering signed a $75,000 contract to provide engineering services beginning on April 1. D. On January 31, M4 Engineering bought $7,500 of office supplies on account. E. On February 10, M4 Engineering paid the utility bills of $300. F. On February 15, M4 Engineering bought computers and other Office Equipment on account for $20,000. G. On February 28, M4 Engineering received $50,000 advance payment for work that will begin on April 1. On March 31, the CFO reviewed M4 Engineering's books and noted the following below. Prepare the AJES (Adjusting Journal Entries), update the T-accounts, prepare the AdjTB (Adjusted Trial Balance) and Financial Statements. H. Employees were owed $12,000 for hours work in March. L Only $1,200 of supplies were still on hand. J. Three months of rent had expired (been used). K. The March 31 utility bill had not been received. The CFO expects that $320 of utility services were used. L $25,000 of the engineering work related to transactions (C) and (G) have been completed. On March 31, the CFO reviewed M4 Engineering's books and noted the following below. Prepare the AJES (Adjusting Journal Entries), update the T-accounts, prepare the Ad/TB (Adjusted Trial Balance) and Financial Statements.
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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