The balances of the ledger accounts of Pelango Furniture as of December 31, the end of its fiscal year, are as follows: Cash: $12,482 Accounts Receivable: 38,962 Merchandise Inventory: 118,628 Supplies: 1,850 Prepaid Insurance: 2,488 Store Equipment: 32,824 Accumulated Depreciation, Store Equipment: 26,420 Office Equipment: 11,236 Accumulated Depreciation, Office Equipment: 3,410 Notes Payable: 6,000 Accounts Payable: 23,420 Unearned Rent: 3,150 L. Pelango, Capital: 120,532 L. Pelango, Drawing: 28,000 Sales: 647,090 Sales Returns and Allowances: 8,848 Purchases: 519,374 Purchases Returns and Allowances: 12,440 Purchases Discounts: 8,634 Freight In: 22,824 Wages Expense: 52,800 Interest Expense: 780 Data for the adjustments are as follows: a–b. Merchandise Inventory at December 31, $104,565. c. Wages accrued on December 31, $934. d. Supplies inventory (on hand) at December 31, $755 e. Depreciation of store equipment, $4,982 f. Depreciation of office equipment, $1,531 g. Insurance expired during the year, $935 h. Rent earned, $2,450. Required: 1. Complete the worksheet after entering the account names and balances onto the worksheet. 2. Journalize the adjusting entries.
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 balances of the ledger accounts of Pelango Furniture as of December 31, the end of its fiscal year, are as follows:
Cash: $12,482
Merchandise Inventory: 118,628
Supplies: 1,850
Prepaid Insurance: 2,488
Store Equipment: 32,824
Office Equipment: 11,236
Accumulated Depreciation, Office Equipment: 3,410
Notes Payable: 6,000
Accounts Payable: 23,420
Unearned Rent: 3,150
L. Pelango, Capital: 120,532
L. Pelango, Drawing: 28,000
Sales: 647,090
Sales Returns and Allowances: 8,848
Purchases: 519,374
Purchases Returns and Allowances: 12,440
Purchases Discounts: 8,634
Freight In: 22,824
Wages Expense: 52,800
Interest Expense: 780
Data for the adjustments are as follows:
a–b. Merchandise Inventory at December 31, $104,565.
c. Wages accrued on December 31, $934.
d. Supplies inventory (on hand) at December 31, $755
e. Depreciation of store equipment, $4,982
f. Depreciation of office equipment, $1,531
g. Insurance expired during the year, $935
h. Rent earned, $2,450.
Required:
1. Complete the worksheet after entering the account names and balances onto the worksheet.
2. Journalize the
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