On January 1, 2025, the ledger of Blossom Company contained these liability accounts. Accounts Payable Sales Taxes Payable Unearned Service Revenue During January, the following selected transactions occurred. Jan 1 S 12 14 20 $42.600 6,700 19,100 Borrowed $18,000 in cash from Apex Bank on a 4-month, 5%, $18,000 note. Sold merchandise for cash totaling $5,300, which includes 6% sales taxes. Performed services for customers who had made advance payments of $11.600. (Credit Service Revenue) Paid state treasurer's department for sales taxes collected in December 2024. $6.700, Sold 510 units of a new product on credit at $45 per unit, plus 6% sales tax During January, the company's employees earned wages of $70,000. Withholdings related to these wages were $5,355 for FICA $5,000 for federal income tax, and $1,500 for state income tax. The company owed no money related to these earnings for federal or state unemployment tax. Assume that wages earned during January will be paid during February. No entry had been recorded for wages or payroll tax expense as of January 31 Date Journalize the January transactions. Omit cost of goods sold entries. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Record journal entries in the order presented in the problem. Round answers to nearest whole dollar amount, €8.5,275) Account Titles and Explanation Debit Credit I
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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