Question 2: 1. At year end, unrecorded interest expense due to creditors was Rs. 4,000 (payable in the next year). Prepare the adjusting entry at year end (12/31): 2. Prepaid Insurance account began the year with a balance of Rs. 230. During the year, insurance in the amount of Rs. 570 was purchased. At the end of the year March 31", 2009 the amount of insurance still unexpired was Rs. 350. Prepare the year end adjusting entry: 3. Wages are paid every Saturday for a five day work week (Mon - Fri; two days are unpaid and free). Wages are Rs. 2,000 per week. Prepare the adjusting entry on June 30, assuming July 1 falls on a Wednesday: 4. At year end, unrecorded interest receivable from the Government bonds is Rs. 1,700. Prepare the adjusting entry: 5. On July 3, a deposit in the amount of Rs. 5,000 was received for services to be performed. By the end of the month, services in the amount of Rs. 1,200 were performed. Prepare journal entries for the original receipt of the deposit and the adjusting entry on 31st July: 6. On October 4, Smith Company rendered services valued at Rs. 11,000. The client will pay for the services November 1 and closing are done at the end of each month pass this transaction at the end of period: 7. The Supplies asset account began the year with a balance of Rs. 190. During the year, supplies in the amount of Rs. 490 were purchased. At the end of the year the inventory of supplies on hand was Rs. 220. Prepare the year end adjusting entry: Requirements: 1. Prepare Adjusting entries
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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