Journalize the July transactions.
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.
Mike Greenberg opened Cheyenne Window Washing Co. on July 1, 2020. During July, the following transactions were completed.
List of accounts:
- Accounts Payable
Accounts Receivable Accumulated Depreciation -Buildings- Accumulated Depreciation-Equipment
- Accumulated Depreciation-Delivery Trucks
- Advertising Expense
- Buildings
- Cash
- Debt Investments
- Delivery Trucks
- Depreciation Expense
- Equipment
- Gasoline Expense
- Income Summary
- Income Tax Expense
- Income Taxes Payable
- Insurance Expense
- Interest Expense
- Interest Payable
- Interest Receivable
- Interest Revenue
- Inventory
- Land
- Long-term Debt
- Long-term Investments
- Maintenance and Repairs Expense
- Miscellaneous Expense
- Mortgage Payable
- No Entry
- Notes Payable
- Notes Receivable
- Owner's Capital
- Owner's Drawings
- Patent Needs
- Prepaid Advertising
- Prepaid Insurance
- Prepaid Rent
- Rent Expense
- Rent Revenue
- Salaries and Wages Expense
- Salaries and Wages Payable
- Service Revenue
- Short-Term Investments
- Stock Investments
- Supplies
- Supplies Expense
- Ticket Revenue
- Unearned Rent Revenue
- Unearned Service Revenue
- Utilities Expense
| July 1 | Owner invested $9,800 cash in the company. | ||
| 1 | Purchased used truck for $6,560, paying $1,640 cash and the balance on account. | ||
| 3 | Purchased cleaning supplies for $740 on account. | ||
| 5 | Paid $1,440 cash on a 1-year insurance policy effective July 1. | ||
| 12 | Billed customers $3,030 for cleaning services performed. | ||
| 18 | Paid $820 cash on amount owed on truck and $410 on amount owed on cleaning supplies. | ||
| 20 | Paid $1,640 cash for employee salaries. | ||
| 21 | Collected $1,310 cash from customers billed on July 12. | ||
| 25 | Billed customers $2,050 for cleaning services performed. | ||
| 31 | Paid $240 for maintenance of the truck during month. | ||
| 31 | Owner withdrew $490 cash from the company. |
Journalize the July transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record
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