Dores Marie Pateno Hobby Shop Unadjusted Trial Balance December 31, 2020 110 Cash 100,000 120 Accounts receivables 500,000 130 Merchandise inventory 700,000 140 Prepaid rent 300,000 150 Shop equipment 1,600,000 155 Accumulated depreciation 200,000 210 Accounts payable 400,000 220 Pateno, capital 1,300,000 230 Pateno, withdrawals 100,000 240 Sales 2,900,000 310 Sales discount 100,000 320 Purchases 800,000 410 Purchases returns and allowances 200,000 510 Transportation in 100,000 520 Salaries expense 400,000 530 Advertising expense 150,000 540 Utilities expense 100,000 550 Supplies expense 50,000 Totals 5,000,000 5,000,000 Additional information: Accrued salaries at year-end amounted to P30,000. Rent in the amount of P100,000 has expired during the year. Depreciation on shop equipment is P200,000. The Dec. 31 merchandise inventory amounted to P500,000. required; Prepare post- closing entries reversing entries for January 1,2021
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.
|
Dores Marie Pateno Hobby Shop |
|||||
|
Unadjusted |
|||||
|
December 31, 2020 |
|||||
|
110 |
Cash |
100,000 |
|||
|
120 |
|
500,000 |
|
||
|
130 |
Merchandise inventory |
700,000 |
|
||
|
140 |
Prepaid rent |
300,000 |
|
||
|
150 |
Shop equipment |
1,600,000 |
|
||
|
155 |
|
|
200,000 |
||
|
210 |
Accounts payable |
|
400,000 |
||
|
220 |
Pateno, capital |
|
1,300,000 |
||
|
230 |
Pateno, withdrawals |
100,000 |
|
||
|
240 |
Sales |
|
2,900,000 |
||
|
310 |
Sales discount |
100,000 |
|
||
|
320 |
Purchases |
800,000 |
|
||
|
410 |
Purchases returns and allowances |
|
200,000 |
||
|
510 |
Transportation in |
100,000 |
|
||
|
520 |
Salaries expense |
400,000 |
|
||
|
530 |
Advertising expense |
150,000 |
|
||
|
540 |
Utilities expense |
100,000 |
|
||
|
550 |
Supplies expense |
50,000 |
|
||
|
Totals |
5,000,000 |
5,000,000 |
Additional information:
- Accrued salaries at year-end amounted to P30,000.
- Rent in the amount of P100,000 has expired during the year.
- Depreciation on shop equipment is P200,000.
- The Dec. 31 merchandise inventory amounted to P500,000.
required;
Prepare
reversing entries for January 1,2021
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