OKENDO CONSULTING Trial Balance May 31, 2014 Debit Credit $ 7,500 3,000 2,500 3,600 12,000 Cash Accounts Receivable Supplies Prepaid Insurance Equipment Accounts Payable Unearned Service Revenue Common Stock $ 3,500 4,000 19,100 7,500 Service Revenue Salaries and Wages Expense Rent Expense 4,000 1,500 $34,100 $34,100 in addition to those accounts listed on the trial balance, the chart of accounts for Okendo Consulting also contains the following accounts: Accumulated Depreciation-Equipm t, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expens, and Supplies Expense. Other data: 1. $1,000 of supplies have been used during the month. 2. Utility costs incurred but not paid are $300. 3. The insurance policy is for 3 years. 4. $1,500 of the balance in the Unearned Service Revenue account remains unearned at the end of the month. 5. Assume May 31 is a Tuesday and employees are paid on Fridays. Okendo Consulting has two employees that are paid $600 each for a 5-day work week. 6. The equipment has a 5-vear life with no salvage value and is being depreciated at $200 per month for 60 months. 7. Invoices representing $1,500 of services performed during the month have not been recorded as of May 31. Instructions (a) Prepare the adjusting entries for the month of May. (b) Post the adjusting entries to the ledger accounts. Enter the totals from the trial balance as beginning account balances. (Use T-accounts.) (c) Prepare an adjusted trial balance at May 31, 2014. with eight air-conditioned Prepar Lune
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.
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