Research and Development Instructions Chart Of Accounts General Journal Instructions Notting Hill Company incurred the following costs for R&D activities: Material used from inventory $15,000 Equipment purchased (with cash) for R&D with no other use 85,000 Depreciation on building housing multiple R&D activities 10,000 Wages and salaries paid to R&D employees 38,500 Required: Prepare Notting Hill's journal entry(ies) to record its R&D.
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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9. MC.12.09
Notting Hill Company
10. MC.12.10
General Ledger
11. RE.12.01.BLANKSHEET
ASSETS
REVENUE
12. RE.12.02
111 Cash
411 Sales Revenue
121 Accounts Receivable
13. RE.12.03.BLANKSHEET
141 Inventory
EXPENSES
152 Prepaid Insurance
500 Cost of Goods Sold
14. RE.12.04.BLANKSHEET
181 Equipment
511 Insurance Expense
15. RE.12.05.BLANKSHEET
189 Accumulated Depreciation: Building
512 Utilities Expense
521 Salaries Expense
16. RE.12.06.BLANKSHEET
LIABILITIES
526 Research and Development Expense
17. RE.12.07.BLANKSHEET
211 Accounts Payable
532 Bad Debt Expense
231 Salaries Payable
540 Interest Expense
18. RE.12.08
250 Unearned Revenue
541 Depreciation Expense
19. RE.12.09.BLANKSHEET
261 Income Taxes Payable
559 Miscellaneous Expenses
910 Income Tax Expense
20. RE.12.10.BLANKSHEET
EQUITY
311 Common Stock
21. EX.12.01
331 Retained Earnings
22. EX.12.02.BLANKSHEET
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9. MC.12.09
Research and Development
10. MC.12.10
Instructions
Chart Of Accounts
General Journal
11. RE.12.01.BLANKSHEET
Instructions
12. RE.12.02
Notting Hill Company incurred the following costs for R&D activities:
13. RE.12.03.BLANKSHEET
Material used from inventory
$15,000
14. RE.12.04.BLANKSHEET
Equipment purchased (with cash) for R&D with no other use
85,000
Depreciation on building housing multiple R&D activities
10,000
15. RE.12.05.BLANKSHEET
Wages and salaries paid to R&D employees
38,500
16. RE.12.06.BLANKSHEET
Required:
17. RE.12.07.BLANKSHEET
Prepare Notting Hill's journal entry(ies) to record its R&D.
18. RE.12.08
19. RE.12.09.BLANKSHEET
20. RE.12.10.BLANKSHEET
21. EX.12.01
22. EX.12.02.BLANKSHEET
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