The adjusted trial balance for Zahurak Company follows. Adjusted Trial Balance December 31 No. Account Title Dr. Cr. 101 Cash $ 8,200 106 Accounts receivable 35,834 153 Trucks 41,000 154 Accumulated depreciation—Trucks 16,482 183 Land 30,000 201 Accounts payable 19,106 209 Salaries payable 4,371 233 Unearned fees 3,771 301 E. Happ, Capital 68,829 302 E. Happ, Withdrawals 14,831 401 Plumbing fees earned 60,000 611 Depreciation expense—Trucks 5,494 622 Salaries expense 28,080 640 Rent expense 9,120 Totals $ 172,559 $ 172,559 a. Use the adjusted trial balance to prepare the December 31 year-end income statement. b. Use the adjusted trial balance to prepare the December 31 year-end statement of owner's equity. The E. Happ, Capital account balance was $68,829 on December 31 of the prior year. c. Use the adjusted trial balance to prepare the December 31 year-end balance sheet.
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 adjusted
| Adjusted Trial Balance | |||||||
| December 31 | |||||||
| No. | Account Title | Dr. | Cr. | ||||
| 101 | Cash | $ | 8,200 | ||||
| 106 | 35,834 | ||||||
| 153 | Trucks | 41,000 | |||||
| 154 | 16,482 | ||||||
| 183 | Land | 30,000 | |||||
| 201 | Accounts payable | 19,106 | |||||
| 209 | Salaries payable | 4,371 | |||||
| 233 | Unearned fees | 3,771 | |||||
| 301 | E. Happ, Capital | 68,829 | |||||
| 302 | E. Happ, Withdrawals | 14,831 | |||||
| 401 | Plumbing fees earned | 60,000 | |||||
| 611 | Depreciation expense—Trucks | 5,494 | |||||
| 622 | Salaries expense | 28,080 | |||||
| 640 | Rent expense | 9,120 | |||||
| Totals | $ | 172,559 | $ | 172,559 | |||
a. Use the adjusted trial balance to prepare the December 31 year-end income statement.
b. Use the adjusted trial balance to prepare the December 31 year-end statement of owner's equity. The E. Happ, Capital account balance was $68,829 on December 31 of the prior year.
c. Use the adjusted trial balance to prepare the December 31 year-end
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