Mr. Arvin Khan started his own consulting firm, ‘Arvin Consulting’ on April 1, 2019. The trial balance before adjustment on June 30, 2019, is as follows: Arvin Consulting’ Trial Balance June 30, 2019 Number Account Titles Debit Credit 1 Cash Tk.3,96,000 2 Supplies 33,000 3 Prepaid Insurance 60,000 4 Office Furniture 75,000 5 Unearned Revenue Tk.74,000 6 Mortgage Payable 2,50,000 7 Capital 4,05,000 8 Drawing 50,000 9 Service Revenue 2,25,000 10 Rent Expense 36,000 11 Salaries Expense 2,10,000 12 Utility Expense 94,000 9,54,000 9,54,000 Other information: (1) Insurance policy is for 1 year. (2) Account on June 30 shows Tk. 10,000 of supplies on hand (3) Annual Depreciation is Tk.12,000 on Furniture. (4) Unearned revenue of Tk. 30,000 was earned prior to June 30, (5) Salaries of Tk. 20,000 were unpaid at June 30. (6) Mortgage interest rate is 15% per year (the mortgage was taken out on June 1). (7) Service provided of Tk. 1,25,000 on credit which is not recorded yet. Instructions: Journalize the adjusting entries on June 30, 2019, for the three month period April 1 to June 30. 6 Prepare an adjusted trial balance.
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.
Mr. Arvin Khan started his own consulting firm, ‘Arvin Consulting’ on April 1, 2019. The
Arvin Consulting’
Trial Balance
June 30, 2019
|
Number |
Account Titles |
Debit |
Credit |
|
1 |
Cash |
Tk.3,96,000 |
|
|
2 |
Supplies |
33,000 |
|
|
3 |
Prepaid Insurance |
60,000 |
|
|
4 |
Office Furniture |
75,000 |
|
|
5 |
Unearned Revenue |
Tk.74,000 |
|
|
6 |
Mortgage Payable |
2,50,000 |
|
|
7 |
Capital |
4,05,000 |
|
|
8 |
Drawing |
50,000 |
|
|
9 |
Service Revenue |
2,25,000 |
|
|
10 |
Rent Expense |
36,000 |
|
|
11 |
Salaries Expense |
2,10,000 |
|
|
12 |
Utility Expense |
94,000 |
|
|
9,54,000 |
9,54,000 |
Other information:
(1) Insurance policy is for 1 year.
(2) Account on June 30 shows Tk. 10,000 of supplies on hand
(3) Annual
(4) Unearned revenue of Tk. 30,000 was earned prior to June 30,
(5) Salaries of Tk. 20,000 were unpaid at June 30.
(6) Mortgage interest rate is 15% per year (the mortgage was taken out on June 1).
(7) Service provided of Tk. 1,25,000 on credit which is not recorded yet.
Instructions:
- Journalize the
adjusting entries on June 30, 2019, for the three month period April 1 to June 30. 6 - Prepare an adjusted trial balance.
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