Part II. Record the following transactions on the general journal using double-entry bookkeeping. Oct. 1 - Rey Fernan Refozar, CPA, obtained the funds to start his own business by withdrawing P800,000 from his personal savings. He deposited the money in a new bank account that he opened in the name of the firm, Refozar Accounting Services. The office is managed by Jiexel Manongsong, CPA, MBA. Oct. 3 – Manongsong bought a computer, a copy machine, a fax machine, calculators and other necessary equipment from M. Medina Inc., at cost of P100,000. M. Medina Inc., agreed to allow 60 days for the firm to pay the bill. Oct. 4 – Manongsong placed an order for toner, fax paper, bond paper, pens, folders and other supplies that had a total cost of P20,000. The entity that sold the items, Cavite Supplies, Inc., requires cash payments from businesses that are under six months old. Refozar Accounting Services therefore issued a check to pay for the items. Oct. 9 – Manongsong decided to pay P40,000 to M. Medina Inc., to reduce the firm's debt to the business. Oct. 13 – Refozar Accounting Services earned P70,000 of revenue from charge account to clients. These clients are allowed 30 days to pay. Oct. 18 – Refozar Accounting Services hired an accounting staff on Oct. 1 to help in the business. The firm paid P25,000 in salaries for this employee and Jiexel Monongsong. Oct. 23 – Entity received P30,000 from clients who had previously bought services on account. Cash was applied to their accounts. Oct. 28 – Entity earned a total of P210,000 in revenue from clients who paid cash for accounting and bookkeeping services Oct. 30 – Entity paid utility bills worth P35,000. Oct. 31 - Entity issued a check for the payment of monthly rent worth P45,000. Oct. 31 - Record depreciation expense for the month for Computer worth P40,000 with estimated life of 10 years and with salvage value of P3,000. Copy machine worth P20,000 with estimated life of 15 years with salvage value of P2,000. Fax machine worth P20,000 with estimated life 15,year with no salvage value.
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
