In June 20X1. Fred Placement Agency had the following transactions: June 1 Fred invested P60,000 in the new placement agency. Bought equipment for cash, P3,500. Earned placement fee commission of P21,000 but payment from Aaron Co. will not be received until July. 2 3 5 Paid wages expense, P4,000. 7 Fred paid his home utility bill from the company checkbook, P690. 9 Placed Joe Diaz on a national TV show, receiving P9,000 cash. 15 Paid cash for supplies, P3,500. 28 Telephone bill received but not paid, P1,850. 29 Advertising bill received but not paid, P2,000. The chart of accounts includes Cash, 111; Accounts Receivable, 112; Supplies, 131; Equipment, 141; Accounts Payable, 211; A. Fred, Capital, 311; A. Fred, Withdrawals, 312; Placement Fees Earned, 411; Wage Expense, 511; Telephone Expense, 521; and Advertising Expense, 531. Required: 1. Record the above transactions in the general journal. 2. Set up the general ledger based on the chart of accounts and post the entries from the general journal. Determine the ending balance of each account. 3. Prepare the trial balance as of June 30, 20X1.
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.
please skip if you already did this otherwise downvote
Step by step
Solved in 5 steps with 3 images
