Post the journal entries in ledger accounts and find the balances at January 31, 2020. Mr. Rasool started a courier service in Ibri, Fast Couriers, on January 1, 2020. The following transactions occurred during the month of January 2020. January 1 Rasool invested OMR 15,000 in the business. January 3 The business borrowed OMR 5,000 from Bank Nizwa, to be repaid after 3 years. January 4 Bought a delivery van OMR 7,000 from Fine Automobiles. Rasool paid OMR 2,000 and the balance will be paid later. January 5 Paid insurance for full year OMR 1,000. January 7 Billed a customer OMR 500, for delivery service and received cash. January 10 Purchased packing materials (supplies) for OMR 500 on account. January 12 Received invoice from Shelly Autocare OMR 250, for the repair of delivery van. Business agreed to pay the cash later. January 14 Earned OMR 1,000 on a customer order for an overseas delivery, but not received the cash. January 15 Rasool took OMR 300 for his personal expenses. January 18 Provided delivery service for a friend, Mr. Hamed, for OMR 300. Hamed paid OMR 180 immediately and agreed to give the balance later. January 21 Purchased a weighing machine for OMR 400 January 23 Hamed paid the balance amount on the services rendered for him. January 27 Remitted OMR 500 to Fine automobiles. January 30 Paid office rent OMR 150. January 31 Staff salary paid OMR 1,000.
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.
Question 3:
Mr. Rasool started a courier service in Ibri, Fast Couriers, on January 1, 2020. The following
transactions occurred during the month of January 2020.
January 1 Rasool invested OMR 15,000 in the business.
January 3 The business borrowed OMR 5,000 from Bank Nizwa, to be repaid after 3 years.
January 4 Bought a delivery van OMR 7,000 from Fine Automobiles. Rasool paid OMR 2,000 and the
balance will be paid later.
January 5 Paid insurance for full year OMR 1,000.
January 7 Billed a customer OMR 500, for delivery service and received cash.
January 10 Purchased packing materials (supplies) for OMR 500 on account.
January 12 Received invoice from Shelly Autocare OMR 250, for the repair of delivery van. Business
agreed to pay the cash later.
January 14 Earned OMR 1,000 on a customer order for an overseas delivery, but not received the cash.
January 15 Rasool took OMR 300 for his personal expenses.
January 18 Provided delivery service for a friend, Mr. Hamed, for OMR 300. Hamed paid OMR 180
immediately and agreed to give the balance later.
January 21 Purchased a weighing machine for OMR 400
January 23 Hamed paid the balance amount on the services rendered for him.
January 27 Remitted OMR 500 to Fine automobiles.
January 30 Paid office rent OMR 150.
January 31 Staff salary paid OMR 1,000.
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