Pedroni Fuel Company is a small oil services company owned and operated by Ray Zorzi. On October 31, 2019 the end of the current year, Pedroni Company’s accounting clerk prepared the following unadjusted trial balance Pedroni Fuel Company Unadjusted Trial Balance October 31, 2019 Debit Credit Cash 7,500 Accounts Receivable 38,400 Prepaid Insurance 7,200 Supplies 1,980 Land 112,500 Building 300,250 Accumulated Depreciation – Building 87,550 Equipment 135,300 Accumulated Depreciation – Equipment 97,950 Accounts Payable 12,150 Unearned Rent 6,750 Ray Zorzi – Capital 371,000 Ray Zorzi – Drawing 15,000 Fee’s Earned 324,600 Salary & Wages Expense 193,370 Utilities Expense 42,375 Advertising Expense 22,800 Repairs Expense 17,250 Miscellaneous Expense 6,075 Total 900,000 900,000 Year End Adjustment Unexpired insurance at October 31 = $600 Supplies on hand on October 31 = $675 Depreciation of Building for the year = $12,000 Unearned Rent on October 31 = $2,250 Accrued Salary and Wages at October 31 = $2,800 Fees earned but unbilled on October 31 = $10,050 Instructions: Journalize the adjusting entries using the following additional accounts: Salaries & Wages Payable, Rent Revenue, Insurance Expense, Depreciation Expense – Building, Depreciation Expense – Equipment, and Supplies Expense. Determine the balances of the accounts affected by the adjusting entries and 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.
- Pedroni Fuel Company is a small oil services company owned and operated by Ray Zorzi. On October 31, 2019 the end of the current year, Pedroni Company’s accounting clerk prepared the following unadjusted
trial balance
Pedroni Fuel Company
Unadjusted Trial Balance
October 31, 2019
Debit Credit
Cash 7,500
Prepaid Insurance 7,200
Supplies 1,980
Land 112,500
Building 300,250
Equipment 135,300
Accumulated Depreciation – Equipment 97,950
Accounts Payable 12,150
Unearned Rent 6,750
Ray Zorzi – Capital 371,000
Ray Zorzi – Drawing 15,000
Fee’s Earned 324,600
Salary & Wages Expense 193,370
Utilities Expense 42,375
Advertising Expense 22,800
Repairs Expense 17,250
Miscellaneous Expense 6,075
Total 900,000 900,000
Year End Adjustment
Unexpired insurance at October 31 = $600
Supplies on hand on October 31 = $675
Depreciation of Building for the year = $12,000
Unearned Rent on October 31 = $2,250
Accrued Salary and Wages at October 31 = $2,800
Fees earned but unbilled on October 31 = $10,050
Instructions:
Journalize the
- Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance.
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