Journal entry of the transaction: date/s transaction debit credit Apr-02 Invested in the painting business equipment at P12,300 and P71,000 cash. 3 Purchased a car costing P80,000. Paid P50,000 cash and signed a note for the unpaid amount. 4 Purchased painting supplies on account for P3,200. 5 Completed a painting job for a customer on account for P4,800. 7 Received P1,500 cash for painting an apartment room for a customer. 10 Purchased painting supplies for P1,600 cash. 11 Received P4,800 from a customer on April 5. 12 Paid P4,000 for insurance for one-year. 13 Performed painting services on account, P6,200. 18 Paid for the painting supplies bought on April 4. 20 Purchased new equipment for P6,000 and painting supplies for P2,900 both on account. 22 Received a telephone bill for P600, to be paid next month. 23 Received P3,300 in cash from the customer on April 13. 25 Received P3,600 in cash for painting a two-room apartment for a customer. 27 Paid P2,000 on the note signed for the car purchased on April 3. 29 Paid the assistant salary P1,800 30 The owner withdraws P3,000 for personal use.
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.
| date/s | transaction | debit | credit |
| Apr-02 | Invested in the painting business equipment at P12,300 and P71,000 cash. | ||
| 3 | Purchased a car costing P80,000. Paid P50,000 cash and signed a note for the unpaid amount. | ||
| 4 | Purchased painting supplies on account for P3,200. | ||
| 5 | Completed a painting job for a customer on account for P4,800. | ||
| 7 | Received P1,500 cash for painting an apartment room for a customer. | ||
| 10 | Purchased painting supplies for P1,600 cash. | ||
| 11 | Received P4,800 from a customer on April 5. | ||
| 12 | Paid P4,000 for insurance for one-year. | ||
| 13 | Performed painting services on account, P6,200. | ||
| 18 | Paid for the painting supplies bought on April 4. | ||
| 20 | Purchased new equipment for P6,000 and painting supplies for P2,900 both on account. | ||
| 22 | Received a telephone bill for P600, to be paid next month. | ||
| 23 | Received P3,300 in cash from the customer on April 13. | ||
| 25 | Received P3,600 in cash for painting a two-room apartment for a customer. | ||
| 27 | Paid P2,000 on the note signed for the car purchased on April 3. | ||
| 29 | Paid the assistant salary P1,800 | ||
| 30 | The owner withdraws P3,000 for personal use. |
Step by step
Solved in 2 steps with 4 images
