Performance Task no. 1- Below are the transaction of James Calma Merchandising Company for the first month of operation. March 1 Invested cash P 950,000 into the business to buy and sell various merchandise. She also invested computer equipment worth P 85,000 into the business. 3 Purchased on account merchandise, P 430,000 terms 5/10, n/30 FOB Shipping point. Purchased Supplies P 5,000 on account. Sold for cash P 350,000 4 5 6 Returned P 75,000 worth of defective merchandise. Sold on account, P 350,000 to customers with credit terms: 2/10, n/40 FOB Destination Paid the freight charges on transaction made on MAr. 3, P 4,500 Paid in full the purchases made on Mar. 3 Made additional purchases for cash P 350,000 Borrowed from the bank P 1,250,000 and issued a 5-year promissory note. Purchased computer equipment for cash P95,000 Paid salaries to employees - P 10,500 Refund P 50,000 to customers. Sold merchandise for P 450,000. FOB Destination 10 10 11 12 14 15 15 16 17 Paid the freight charges on Mar 10 and 17- P 7,500 Purchased merchandise on account, P 220,000 terms 2/20, n/30 FOB Shipping Point SoldMerchandise, P 450,000 terms 2/10, n/30 20 25 26 27 Owner got P 8,500 from the business. Paid the following: Rent - P 8,0000: Utilities - P 7,0000, Advertising - P 5,000 and| 28 Salaries P 10,500 30 Merchandise inventory at the end amounts to P 150,000. INSTRUCTIONS: 1. Prepare the necessary journal entries for the above transactions 2. Post the journal entries on the General Ledger 3. Prepare the Trial Balance 4. Use the following account titles for journal entries and financial statements
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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