Lavender Company started its business on April 1, 2019. Using the following accounts, prepare the journal entries below in the General Journal. PLEASE NOTE: For similar accounting treatment (DR or CR), you are to record accounts in the order in which they are mentioned in the transactions. Cash Petty Cash Accounts Receivable Office Supplies Computer Equipment Accounts Payable Unearned Services Income Services Income Lavender, Capital Dividends Maintenance Expense Miscellaneous Expense Rent Expense Wages Expense Cash Short and Over The following are the transactions that happened during the month of April. PLEASE NOTE: You must enter the account names exactly as written above and all dollar amounts will be with "$" and commas as needed (i.e. $12,345).
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.
Lavender Company started its business on April 1, 2019. Using the following accounts, prepare the
PLEASE NOTE: For similar accounting treatment (DR or CR), you are to record accounts in the order in which they are mentioned in the transactions.
| Cash | Petty Cash | Office Supplies | Computer Equipment | |
| Accounts Payable | Unearned Services Income | Services Income | Lavender, Capital | Dividends |
| Maintenance Expense | Miscellaneous Expense | Rent Expense | Wages Expense | Cash Short and Over |
The following are the transactions that happened during the month of April.
PLEASE NOTE: You must enter the account names exactly as written above and all dollar amounts will be with "$" and commas as needed (i.e. $12,345).
- The owner invested $7,500 from their personal account to the business account
-
DR CR - Paid rent $600 with check #101.
DR CR - Initiated a petty cash fund $250 check #102.
DR CR - Received $350 cash for services rendered.
DR CR - Purchased office supplies for $125 with check #103.
DR CR - Purchased computer equipment $1,500, paid $500 with check #104, and will pay the remainder in 30 days.
DR CR CR - Received $750 cash for services rendered.
DR CR - Paid wages $375, check #105.
DR CR - Petty cash reimbursement Office Supplies $50, Maintenance Expense $80, Miscellaneous Expense $60. Cash on hand $8. Check #106.
DR DR DR DR or CR? CR - Increased Petty Cash by $70, check #107.
DR CR
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
