On 05.20X1 the company leased the third property and received a total rent of 12 months amounting to 2400 euros. Upon payment, the amount was recognized in its entirety as revenue. On 01.08.20X1 the company bought goods with a purchase value of 12,000, for which it had given a deposit of 2,000. With the purchase, he paid 6,000 and the rest he owes. On 01.09.20X1 the company received an interest-bearing loan of 12000 euros with a duration of 8 months. The interest rate was agreed at 8% per annum and all interest will be paid at the end of the loan, together with the capital. On 01.12.20X1 the company agreed with a customer to refund the amount of 10,000 euros for cancellation of sale, due to the fact that the sold was of inferior quality. The amount will be paid on 31.05.20X2. On 112.20X1, the company signed an irrevocable (cannot be canceled) contract for the purchase of raw materials, the receipt of which will take place in February 20X2. On 31.12.20X1 the supplier's workshop completed the maintenance of an engine room with a total cost of 1600 euros. The maintainer had been given an advance payment of 700 euros. Payment to the supplier will be made in the next financial year Make the initial entries on the date of each transaction, as well as the relevant adjustment entries on 31.12.20X1
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.
- On 05.20X1 the company leased the third property and received a total rent of 12 months amounting to 2400 euros. Upon payment, the amount was recognized in its entirety as revenue.
- On 01.08.20X1 the company bought goods with a purchase value of 12,000, for which it had given a deposit of 2,000. With the purchase, he paid 6,000 and the rest he owes.
- On 01.09.20X1 the company received an interest-bearing loan of 12000 euros with a duration of 8 months. The interest rate was agreed at 8% per annum and all interest will be paid at the end of the loan, together with the capital.
- On 01.12.20X1 the company agreed with a customer to refund the amount of 10,000 euros for cancellation of sale, due to the fact that the sold was of inferior quality. The amount will be paid on 31.05.20X2.
- On 112.20X1, the company signed an irrevocable (cannot be canceled) contract for the purchase of raw materials, the receipt of which will take place in February 20X2.
- On 31.12.20X1 the supplier's workshop completed the maintenance of an engine room with a total cost of 1600 euros. The maintainer had been given an advance payment of 700 euros. Payment to the supplier will be made in the next financial year
Make the initial entries on the date of each transaction, as well as the relevant
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