Prepare ABC Manufacturing Company Ltd General Ledger Adjustment Account as it will appear in the Debtors’ and Creditors’ Ledger from the information given below: Dr. Cr. Balances on 1.4.2019 $ $. Debtors’ Ledger 47,200 240 Creditors’ Ledger 280 26,300 Transactions for the year ended 31.3.2020: Total sales 120,000 Cash sales 8,100 Total purchases 89,500 Credit purchases 67,000 Creditors paid off (in full settlement of $. 40,000) 39,500 Received from debtors (in full settlement of $ 59,000) 58,200 Returns from debtors 2,600 Returns to creditors 1,800 Bills accepted for creditors 5,500 Bills payable matured 8,000 Bills accepted by customers 20,100 Bills receivables dishonoured 1,500 Bills receivable discounted 5,000 Bills receivable endorsed to creditors 4,000 Endorsed bills dishonoured 1,000 Bad debts written off (after deducting bad debts recovered $ 300) 2,200 Provision for doubtful debts 550 Transfer from debtors’ ledger to creditors’ ledger 1,100 Transfer from creditors’ ledger to debtors’ ledger 1,900 Balances on 31.3.2020 Debtors’ ledger (Cr.) 380 Creditors’ ledger (Dr.) List the items that do not affect the General Ledger Account. 420 not affect the General Ledger Account
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.
Prepare ABC Manufacturing Company Ltd General Ledger Adjustment Account as it will appear in the Debtors’ and Creditors’ Ledger from the information given below:
|
|
|
Dr. |
Cr. |
|
|
Balances on 1.4.2019 |
$ |
$. |
|
|
Debtors’ Ledger |
47,200 |
240 |
|
|
Creditors’ Ledger |
280 |
26,300 |
|
|
Transactions for the year ended 31.3.2020: |
|
|
|
|
Total sales |
120,000 |
|
|
|
Cash sales |
8,100 |
|
|
|
Total purchases |
89,500 |
|
|
|
Credit purchases |
67,000 |
|
|
|
Creditors paid off (in full settlement of $. 40,000) |
39,500 |
|
|
|
Received from debtors (in full settlement of $ 59,000) |
58,200 |
|
|
|
Returns from debtors |
2,600 |
|
|
|
Returns to creditors |
1,800 |
|
|
|
Bills accepted for creditors |
5,500 |
|
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|
Bills payable matured |
8,000 |
|
|
|
Bills accepted by customers |
20,100 |
|
|
|
Bills receivables dishonoured |
1,500 |
|
|
Bills receivable discounted |
5,000 |
|
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|
Bills receivable endorsed to creditors |
4,000 |
|
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|
Endorsed bills dishonoured |
1,000 |
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|
|
|
2,200 |
|
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|
Provision for doubtful debts |
550 |
|
|
|
Transfer from debtors’ ledger to creditors’ ledger |
1,100 |
|
|
|
Transfer from creditors’ ledger to debtors’ ledger |
1,900 |
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|
|
Balances on 31.3.2020 |
|
|
|
|
Debtors’ ledger (Cr.) |
380 |
|
|
|
Creditors’ ledger (Dr.)
List the items that do not affect the General Ledger Account.
|
420 |
|
|
not affect the General Ledger Account |
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