El Granado established the EG Data Encoders on May 15, 2014. The following transactions occurred during the month. El Granado invested P157,000 cash to establish the business Bought office desks and filing cabinet for cash, P15,150. El Granado invested in the business her personal computer with a fair value of P57,500. Bought computer software for use in the business from Dela Torre Computer Center for P39,000 paying P15,000 down; the balance is due in thirty days. Paid rent for the month, P5,300. Received cash for services rendered, P5,160. Ordered a panaflex sign for P9,000 from Royal B
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.
El Granado established the EG Data Encoders on May 15, 2014. The following transactions occurred during the month.
El Granado invested P157,000 cash to establish the business
Bought office desks and filing cabinet for cash, P15,150.
El Granado invested in the business her personal computer with a fair value of P57,500.
Bought computer software for use in the business from Dela Torre Computer Center for P39,000 paying P15,000 down; the balance is due in thirty days.
Paid rent for the month, P5,300.
Received cash for services rendered, P5,160.
Ordered a panaflex sign for P9,000 from Royal Bright Enterprises, with P5,000 as down payment and the balance due when installed.
Received bill for advertising from Buy and Sell newspaper, P3,320.
Bought print paper and stationary on account, P2,290.
Received and paid electric bill, P1,240.
Paid bill for advertising recorded previously in transaction (h).
Received cash for services rendered, P10,900.
Paid salaries to employees, P8,400.
El Granado withdrew cash for personal use, P4,500.
Required:
Journalize each transactions
Establish the following T-accounts:
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