Section 9.4 I. Shown below is the completed work sheet for Dr. E. Santala of Cornwall. Ontario. In your Workbook, journalize the adjusting and closing entries for Dr. Santala. Dr. E. Santala, Dentist Work Sheet Year Ended Dec. 31, 20-4 TRIAL BALANCE ADJUSTMENTS INCOME STATEMENT BALANCE SHEET ACCOUNTS DR CR DR CR DR CR DR CR 1306010 37490- 3100 1856 6443417 100000 – 13060 10 37490 Bank Accounts Receivable Supplies Prepaid Insurance Equipment Investment- Bonds Accounts Payable GST Payable GST Recoverable 10350- 5906 6443417 100000 07250– ®4050 3315- 1050- 3315- 1050 690- 2043 1577 690 2043 1577 E. Santala, Capital E. Santala, Drawings Fees Earned 80 000 80000 180374- 7500 02500 180374- 10000 Interest Earned 170- Bank Charges Expense Miscellaneous Expense Rent Expense Telephone Expense Utilities Expense Wages & Salaries Expense 170- 143650 30 000 143650 30 000 2759 - 2759 2957 - 2957 47 302 – 47302- 396 55477 39655477 07250- ®4050 O2500 13800 - 7250 - Supplies Expense Insurance Expense 4050- 2500 Bond Interest Receivable 9592450 190374 – 303130 27 208680/ 94449 50 13800 9444950 Net Income 190374-190374 – 303 | 30 27 3031302
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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