Received balance due from Baird Corp. for the August 5 sale less the return on August 10. Note: Enter debits before credits. Date General Journal Debit Credit Aug 15
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.
![Saved
Prepare journal entries to record the following merchandising transactions of Lowe's, which uses the perpetual inventory system and
the gross method. Hint: It will help to identify each receivable and payable; for example, record the purchase on August 1 in Accounts
Payable-Aron.
1 Purchased merchandise from Aron Company for $7,000 under credit terms of l/10, n/30, FOB destination, invoice
dated August 1.
5 Sold merchandise to Baird Corp. for $4,900 under credit terms of 2/10, n/60, FOB destination, invoice dated
August 5. The merchandise had cost $3,000.
8 Purchased merchandise from Waters Corporation for $6, 000 under credit terms of 1/10, n/45, FOB shipping point,
invoice dated August 8.
9 Paid $100 cash for shipping charges related to the August 5 sale to Baird Corp.
10 Baird returned merchandise from the August 5 sale that had cost Lowe's $500 and was sold for $1,000. The
merchandise was restored to inventory.
12 After negotiations with Waters Corporation concerning problems with the purchases on August 8, Lowe's received a
price reduction from Waters of $600 off the $6,000 of goods purchased. Lowe's debited accounts payable for $600.
14 At Aron's request, Lowe's paid $230 cash for freight charges on the August1 purchase, reducing the amount owed
(accounts payable) to Aron.
15 Received balance due from Baird Corp. for the August 5 sale less the return on August 10.
18 Paid the amount due Waters Corporatic
19 Sold merchandise to Tux Co. for $4,200 under credit terms of n/l0, FOB shipping point, invoice dated August 19.
The merchandise had cost $2,100.
22 Tux requested a price reduction on the August 19 sale because the merchandise did not meet specifications.
Lowe's gave a price reduction (allowance) of $700 to Tux, and credited Tux's accounts receivable for that
amount.
Aug.
for the August 8 purchase less the price allowance from August 12.
29 Received Tux's cash payment for the amount due from the August 19 sale less the price allowance from August 22.
30 Paid Aron Company the amount due from the August 1 purchase.
View transaction list](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2bcd9420-2e71-4537-86fb-91c5a0e6047d%2F4d3758ce-0b15-48f4-87cf-57bd8520d722%2Fhrzlwz_processed.jpeg&w=3840&q=75)
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Journal entry worksheet
1
6.
7
8.
9.
10
16
... ..
Received balance due from Baird Corp. for the August 5 sale less the return on
August 10.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
Aug 15
Record entry
Clear entry
View general journal](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2bcd9420-2e71-4537-86fb-91c5a0e6047d%2F4d3758ce-0b15-48f4-87cf-57bd8520d722%2F43zhps7_processed.jpeg&w=3840&q=75)
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Journalize financial transaction in debit and credit column is one of important and careful process if the transactions are not journalize accurately then it may provide a false balance of the ledger account and in result financial statement will also get impacted.
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