MAGLIOCHETTI MOVING CORP. Statement of Earnings Statement of Financial Position For the Period Ended December 31, 2020 At December 31, 2020 Transportation revenue $ 85,000 Assets Expenses: Cash $ 2,000 Salaries expense 17,000 Receivables 3,000 Maintenance expense 12,000 Inventory of maintenance supplies 6,000 Other expenses 18,000 Equipment 40,000 Total expenses $ 47,000 Prepaid insurance 4,000 Net earnings $ 38,000 Other assets 27,000 Total assets $82,000 Liabilities Accounts payable $ 9,000 Shareholders' Equity Contributed capital (10,000 shares outstanding) 35,000 Retained earnings 38,000 Total liabilities and shareholders' equity $82,000 Additional information: Number of shares 10,000 (a) Maintenance supplies on hand, December 31, 2020 $ 1,800 (b) Prepaid insurance at December 31, 2020 $ 2,000 (Total insurance premium paid in 2020 was debited to Prepaid Insurance) (c) Cost of equipment purchased on January 1, 2020 $40,000 Unrecorded depreciation expense for 2020 $ 5,000 (d) Unpaid (and unrecorded) salaries at December 31, 2020 $ 2,200 (e) At December 31, 2020, transportation revenue collected in advance (credited to Transportation Revenue when cash was received) $ 7,000 (f) Income tax rate 30% Accounts Cash Receivables Inventory of maintenance supplies Equipment Accumulated depreciation Prepaid insurance Other assets Accounts payable Salaries payable Deferred transportation revenue Income tax payable Contributed capital Retained earnings Transportation revenue Salaries expense Maintenance expense Depreciation expense Other expenses Income tax expense Financial Statement Effects + A – A +XA → –A + L – L + SE – SE +R → +SE –R → –SE +E → –SE –E → +SE Question #2 Choose 2 out of 6 transactions, from the list of transactions on the MAGLIOCHETTI MOVING CORP. GivenData worksheet in rows 26 to 33. Record your 2 selected adjusting entry transactions in MAGLIOCHETTI Journal (Part 1) worksheet. Follow the INSTRUCTIONS FOR PREPARING JOURNAL ENTRIES above of this excel worksheet to record your transactions. Explanations are required for each transaction. Be sure to use the corresponding letter of the transactions you choose to the one in Excel.
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.
| Given Data: | ||||
| MAGLIOCHETTI MOVING CORP. | ||||
| Statement of Earnings | |
|||
| For the Period Ended December 31, 2020 | At December 31, 2020 | |||
| Transportation revenue | $ 85,000 | Assets | ||
| Expenses: | Cash | $ 2,000 | ||
| Salaries expense | 17,000 | Receivables | 3,000 | |
| Maintenance expense | 12,000 | Inventory of maintenance supplies | 6,000 | |
| Other expenses | 18,000 | Equipment | 40,000 | |
| Total expenses | $ 47,000 | Prepaid insurance | 4,000 | |
| Net earnings | $ 38,000 | Other assets | 27,000 | |
| Total assets | $82,000 | |||
| Liabilities | ||||
| Accounts payable | $ 9,000 | |||
| Shareholders' Equity | ||||
| Contributed capital (10,000 shares outstanding) | 35,000 | |||
| |
38,000 | |||
| Total liabilities and shareholders' equity | $82,000 | |||
| Additional information: | ||||
| Number of shares | 10,000 | |||
| (a) | Maintenance supplies on hand, December 31, 2020 | $ 1,800 | ||
| (b) | Prepaid insurance at December 31, 2020 | $ 2,000 | ||
| (Total insurance premium paid in 2020 was debited to Prepaid Insurance) | ||||
| (c) | Cost of equipment purchased on January 1, 2020 | $40,000 | ||
| Unrecorded |
$ 5,000 | |||
| (d) | Unpaid (and unrecorded) salaries at December 31, 2020 | $ 2,200 | ||
| (e) | At December 31, 2020, transportation revenue collected in advance (credited to Transportation Revenue when cash was received) | $ 7,000 | ||
| (f) | Income tax rate | 30% | ||
| Accounts | ||||
| Cash | ||||
| Receivables | ||||
| Inventory of maintenance supplies | ||||
| Equipment | ||||
| Prepaid insurance | ||||
| Other assets | ||||
| Accounts payable | ||||
| Salaries payable | ||||
| Deferred transportation revenue | ||||
| Income tax payable | ||||
| Contributed capital | ||||
| Retained earnings | ||||
| Transportation revenue | ||||
| Salaries expense | ||||
| Maintenance expense | ||||
| Depreciation expense | ||||
| Other expenses | ||||
| Income tax expense | ||||
| Financial Statement Effects | ||||
| + A | ||||
| – A | ||||
| +XA → –A | ||||
| + L | ||||
| – L | ||||
| + SE | ||||
| – SE | ||||
| +R → +SE | ||||
| –R → –SE | ||||
| +E → –SE | ||||
| –E → +SE | ||||
Question #2
Choose 2 out of 6 transactions, from the list of transactions on the MAGLIOCHETTI MOVING CORP. GivenData worksheet in rows 26 to 33.
Record your 2 selected
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