Prepare the general journal, general ledger, and trial balance On July 1, Moonlight Lighting was opened by M. Lopez with a total investment of P 250,000 of which P 50,000 was in the form of candles and lamps and P 200,000 in cash. Succeeding transactions are as follows: Date Transactions July 2 Purchased scented candles from Pax Candles, P 7,500. terms : P 2,500 down, balance 2/10, n30 3 Purchased shell decors from Divi Crafts distributor, P 10,000. Term: 3% eom, n/30, FOB shipping point, freight collect. 4 Freight on shell decors paid in cash P 750 5 Cash sales amounted to P 15,000. 7 Sold to Manuela's Grocery goods costing P 9,000. terms: 4,000 down, balance 2/5, 1/10, n 30 8 Purchased office supplies from Rex bookstore P 1,500. Terms: COD 10 Returned part of the candles purchased from Pax which were found unsatisfactory, P500. 12 A customer returned merchandise and was given a cash refund of P 220. 13 The account of Manuela's was collected. 15 Paid salaries in cash to office clerk, P 2,500, and store helper, P 3,500. 17 Delivered goods to Kulasa Scents, P 14,000. Terms, COD 18 Paid Divi Crafts P 5,000 19 Maria Pena, a friend, bought goods with a list price of P 5,500. terms: 1% and 2% trade discounts, balance 2/10, n/30. FOB shipping point. Freight prepaid for Pena P 500. 20 Paid Pax candles in full of account. 25 Collected 20% from Maria Pena 31 Paid 3% percentage tax on sales.
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 the general journal, general ledger, and
On July 1, Moonlight Lighting was opened by M. Lopez with a total investment of P 250,000 of which P 50,000 was in the form of candles and lamps and P 200,000 in cash.
Succeeding transactions are as follows:
| Date | Transactions |
| July 2 | Purchased scented candles from Pax Candles, P 7,500. terms : P 2,500 down, balance 2/10, n30 |
| 3 | Purchased shell decors from Divi Crafts distributor, P 10,000. Term: 3% eom, n/30, FOB shipping point, freight collect. |
| 4 | Freight on shell decors paid in cash P 750 |
| 5 | Cash sales amounted to P 15,000. |
| 7 | Sold to Manuela's Grocery goods costing P 9,000. terms: 4,000 down, balance 2/5, 1/10, n 30 |
| 8 | Purchased office supplies from Rex bookstore P 1,500. Terms: COD |
| 10 | Returned part of the candles purchased from Pax which were found unsatisfactory, P500. |
| 12 | A customer returned merchandise and was given a cash refund of P 220. |
| 13 | The account of Manuela's was collected. |
| 15 | Paid salaries in cash to office clerk, P 2,500, and store helper, P 3,500. |
| 17 | Delivered goods to Kulasa Scents, P 14,000. Terms, COD |
| 18 | Paid Divi Crafts P 5,000 |
| 19 | Maria Pena, a friend, bought goods with a list price of P 5,500. terms: 1% and 2% trade discounts, balance 2/10, n/30. FOB shipping point. Freight prepaid for Pena P 500. |
| 20 | Paid Pax candles in full of account. |
| 25 | Collected 20% from Maria Pena |
| 31 | Paid 3% percentage tax on sales. |
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