January 1. Started business with GH¢45,000 cash. 15 Bought goods from Adama ltd. Worth GH¢15,000 17 Cash sales amounting to GH¢20,000 21 Sold goods on credit to Duah for GH¢16,000 25 Paid wages totalling GH¢6,000 25 Paid Adama Ltd GH¢5,000 as part-payment of their debt by cheque 28 Goods worth GH¢600 was taken out by the proprietor for personal use. 29 Bought motor car on credit costing GH¢12,000 29 Duah made part-payment amounting to GH¢10,000 by cheque 30 Paid the following expenses by cash: Fuel GH¢450; Water GH¢400. Required: Enter the transaction in the accounts, Close each accounts at the end of the month and
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.
Ug & Sons commenced business on January 1st and decided to close off their books and ascertain the
January 1. Started business with GH¢45,000 cash.
15 Bought goods from Adama ltd. Worth GH¢15,000
17 Cash sales amounting to GH¢20,000
21 Sold goods on credit to Duah for GH¢16,000
25 Paid wages totalling GH¢6,000
25 Paid Adama Ltd GH¢5,000 as part-payment of their debt by cheque
28 Goods worth GH¢600 was taken out by the proprietor for personal use.
29 Bought motor car on credit costing GH¢12,000
29 Duah made part-payment amounting to GH¢10,000 by cheque
30 Paid the following expenses by cash: Fuel GH¢450; Water GH¢400.
Required:
Enter the transaction in the accounts,
Close each accounts at the end of the month and
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