The accounts and their balances in the ledger of Markey's Mountain Shop as of December 31, the end of its fiscal year, are as follows: Cash $12, 840 Accounts Receivable 3,242 Merchandise Inventory 137,757 Store Supplies 1,530 Prepaid Insurance 2,845 Land 22,000 Building 86,000 Accumulated Depreciation, Building 36,940 Store Equipment54,952 Accumulated Depreciation, Store Equipment 13,348 Notes Payable 10,500 Accounts Payable 18,540 Sales Tax Payable5,706 B. Markey Capital 171,000 B. Markey Drawing 52,000 Sales 458,905 Sales Returns and Allowances 7,590 Cost of Goods Sold 265,315 Salary Expense 52,973 Advertising Expense 6,288 Urtilities Expense 7,355 Property Tax Expense 800 Miscellaneous Expense 775 Interest Expense 677 Data for the adjustments are as follows. Assume that Marke's Mountain Shop uses the perpetual inventory system. a. Merchandise Inventory at December 31, $140,357. b. Store supplies Inventory (on hand) at Decemver 31, $540 c. Depreciation of building, $3,400. d. Depreciation of store equipment, $ 3,800 e. Salaries Accrued at December 31, $1,250 f. Insurance expired during the year, $1,480 Required 1. Complete the work sheet after entering the account names and balances onto the work sheet. 2. Journalize the adjusting entries. If using manual working papers, record adjusting entries on journal page 63.
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.
The accounts and their balances in the ledger of Markey's Mountain Shop as of December 31, the end of its fiscal year, are as follows:
Cash $12, 840
Merchandise Inventory 137,757
Store Supplies 1,530
Prepaid Insurance 2,845
Land 22,000
Building 86,000
Store Equipment54,952
Accumulated Depreciation, Store Equipment 13,348
Notes Payable 10,500
Accounts Payable 18,540
Sales Tax Payable5,706
B. Markey Capital 171,000
B. Markey Drawing 52,000
Sales 458,905
Sales Returns and Allowances 7,590
Cost of Goods Sold 265,315
Salary Expense 52,973
Advertising Expense 6,288
Urtilities Expense 7,355
Property Tax Expense 800
Miscellaneous Expense 775
Interest Expense 677
Data for the adjustments are as follows. Assume that Marke's Mountain Shop uses the perpetual inventory system.
a. Merchandise Inventory at December 31, $140,357.
b. Store supplies Inventory (on hand) at Decemver 31, $540
c. Depreciation of building, $3,400.
d. Depreciation of store equipment, $ 3,800
e. Salaries Accrued at December 31, $1,250
f. Insurance expired during the year, $1,480
Required
1. Complete the work sheet after entering the account names and balances onto the work sheet.
2. Journalize the
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