Q # 3 The accounts in the ledger of Donald Brown, with the adjusted balance on Dec 30, the end of the current fiscal year, are as follows Account Title Debit Credit Cash 170,000 Account Receivable 70,000 Merchandise Inventory-Beg 60,000 Office Supplies 5,000 Land 50,000 Store Equipment 40,000 Accumulated Dep. -Store Equipment 30,000 Office Equipment 50,000 Accumulated. Dep.-Office Equipment 25,000 Account Payable 38,850 Salaries Payable 22,000 Donald Brown, Capital 125,000 Sales 500,000 Sales Discounts 6,000 Purchases 250,000 Purchase returned 18,000 Purchase Discounts 12,000 Transportation In 11,550 Advertising Expense 18,000 Bad debts expense 16,520 Dep. Exp. -Store Equipment 13,500 Allowance for bad debts 16,520 Salaries Expense 15,000 Rent Expense 1,000 Insurance Expense 5,000 Office Supplies Expense 5,800 787,370 787,370 Data for Adjustment as at Dec 31 Merchandise Inventory’s physical balance at the end Rs. 58,000 Required: Prepare a multiple-step income statement. Prepare a report form of balance sheet.
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.
Q # 3 The accounts in the ledger of Donald Brown, with the adjusted balance on Dec 30, the end of the current fiscal year, are as follows
|
Account Title |
Debit |
Credit |
|
Cash |
170,000 |
|
|
Account Receivable |
70,000 |
|
|
Merchandise Inventory-Beg |
60,000 |
|
|
Office Supplies |
5,000 |
|
|
Land |
50,000 |
|
|
Store Equipment |
40,000 |
|
|
Accumulated Dep. -Store Equipment |
|
30,000 |
|
Office Equipment |
50,000 |
|
|
Accumulated. Dep.-Office Equipment |
|
25,000 |
|
Account Payable |
|
38,850 |
|
Salaries Payable |
|
22,000 |
|
Donald Brown, Capital |
|
125,000 |
|
Sales |
|
500,000 |
|
Sales Discounts |
6,000 |
|
|
Purchases |
250,000 |
|
|
Purchase returned |
18,000 |
|
|
Purchase Discounts |
|
12,000 |
|
Transportation In |
11,550 |
|
|
Advertising Expense |
18,000 |
|
|
|
16,520 |
|
|
Dep. Exp. -Store Equipment |
13,500 |
|
|
Allowance for bad debts |
|
16,520 |
|
Salaries Expense |
15,000 |
|
|
Rent Expense |
1,000 |
|
|
Insurance Expense |
5,000 |
|
|
Office Supplies Expense |
5,800 |
|
|
787,370 |
787,370 |
Data for Adjustment as at Dec 31
Merchandise Inventory’s physical balance at the end Rs. 58,000
Required:
- Prepare a multiple-step income statement.
- Prepare a report form of
balance sheet .
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
