From the information given below, complete the corrected trial balance of C. Canada Manufacturers. The Trial balance of C. Canada Manufacturers was prepared by an inexperienced bookkeeper. You have been asked to assist and prepare the trial balance for the business. In examining the general journal and the ledger accounts you discover the following information. 1. The correct balance in the Loan Payable account is $5 400. 2. A purchase of lawnmower fuel for cash of $180 was erroneously recorded as a purchase on credit. 3. The correct debits and credits in the Accounts Receivable totalled $7 600 and $5 400 respectively. 4. A $550 payment for salaries was not posted to the Cash at Bank account. 5. The debit to record a withdrawal of $600 in cash by the owner was not posted. Credit Balances C Canada Manufacturers Debit Balanced Trial balance as at 30 June 2021 Cash at bank 2 400 Accounts receivable 530 Supplies Equipment Accounts payable Salaries payable Loan payable Capital Drawings 420 8 200 2 160 2 980 5 400 6 400 6 220 13 800 Service revenue Salaries expense Rent expense 5 100 3 200 Other expense 2 950 C Canada Manufacturers Trial balance as at 30 June 2021 Debit Balanced Credit Balances Cash at bank Accounts receivable Supplies Equipment Accounts payable Salaries payable Loan payable Capital Drawings Service revenue Salaries expense Rent expense Other expense
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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