The following are the trial balance and the other information related to Edward Consulting Engineer. EDWARD CONSULTING ENGINEER TRIAL BALANCE DECEMBER 31, 2020 Debit Credit Cash $29,500 Accounts Receivable 52,300 Allowance for Doubtful Accounts $799 Supplies 2,290 Prepaid Insurance 1,170 Equipment 27,800 Accumulated Depreciation-Equipment 6,614 Notes Payable 7,200 Common Stock 10,000 Retained Earnings 25,863 Service Revenue 106,761 Rent Expense 10,387 Salaries and Wages Expense 31,170 Utilities Expenses 1,850 Office Expense 770 $157,237 $157,237 1. Fees received in advance from clients $6,120, which were recorded as revenue. 2. Services performed for clients that were not recorded by December 31, $5,125. 3. Bad debt expense for the year is $1,536. 4. Insurance expired during the year $475. 5. Equipment is being depreciated at 10% per year. 6. Edward gave the bank a 90-day, 10% note for $7,200 on December 1, 2020. 7. Rent of the building is $799 per month. The rent for 2020 has been paid, as has that for January 2021, and recorded as Rent Expense. 8. Office salaries and wages earned but unpaid December 31, 2020, $2,643. Part 1 From the trial balance and other information given, prepare annual adjusting entries as of December 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Part 2 Prepare an income statement for 2020. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Part 3 Prepare a retained earnings statement for 2020. Edward paid a $17,850 cash dividend during the year. (recorded in Retained Earnings.) (List items that increase owner's capital first.) Part 4 Prepare a classified balance sheet for 2020. (List current assets in the order of liquidity.) List of Accounts Assistance Used Accounts Payable Accounts Receivable Accumulated Depreciation-Building Accumulated Depreciation-Equipment Administrative Expenses Admissions Revenue Advertising Expense Allowance for Doubtful Accounts Bad Debt Expense Buildings Cash Common Stock Cost of Goods Sold Current Maturity of Long-Term Debt Delivery Expense Depreciation Expense Dividends Dues Revenue Equipment Green Fees Revenue Income Summary Income Tax Expense Insurance Expense Interest Expense Interest Payable Interest Receivable Interest Revenue Inventory Land Maintenance and Repairs Expense Mortgage Payable No Entry Notes Payable Notes Receivable Office Expense Owner's Capital Owner's Drawings Prepaid Advertising Prepaid Insurance Prepaid Rent Property Tax Expense Property Tax Payable Rent Expense Rent Receivable Rent Revenue Retained Earnings Salaries and Wages Expense Salaries and Wages Payable Sales Discounts Sales Returns and Allowances Sales Revenue Selling Expenses Service Revenue Subscription Revenue Supplies Supplies Expense Telephone and Internet Expense Utilities Expenses Unearned Admissions Revenue Unearned Dues Revenue Unearned Service Revenue Unearned Rent Revenue Unearned Subscriptions Revenue
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 following are the
EDWARD CONSULTING ENGINEER |
||||||
Debit |
Credit |
|||||
Cash | $29,500 | |||||
52,300 | ||||||
Allowance for Doubtful Accounts | $799 | |||||
Supplies | 2,290 | |||||
Prepaid Insurance | 1,170 | |||||
Equipment | 27,800 | |||||
6,614 | ||||||
Notes Payable | 7,200 | |||||
Common Stock | 10,000 | |||||
25,863 | ||||||
Service Revenue | 106,761 | |||||
Rent Expense | 10,387 | |||||
Salaries and Wages Expense | 31,170 | |||||
Utilities Expenses | 1,850 | |||||
Office Expense | 770 | |||||
$157,237 |
$157,237 |
1. | Fees received in advance from clients $6,120, which were recorded as revenue. | |
2. | Services performed for clients that were not recorded by December 31, $5,125. | |
3. | ||
4. | Insurance expired during the year $475. | |
5. | Equipment is being |
|
6. | Edward gave the bank a 90-day, 10% note for $7,200 on December 1, 2020. | |
7. | Rent of the building is $799 per month. The rent for 2020 has been paid, as has that for January 2021, and recorded as Rent Expense. | |
8. | Office salaries and wages earned but unpaid December 31, 2020, $2,643. |
Part 1
From the trial balance and other information given, prepare annual
Part 2
Prepare an income statement for 2020. (Enter loss using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
Part 3
Prepare a retained earnings statement for 2020. Edward paid a $17,850 cash dividend during the year. (recorded in Retained Earnings.) (List items that increase owner's capital first.)
Part 4
Prepare a classified balance sheet for 2020. (List current assets in the order of liquidity.)
List of Accounts
Assistance Used
- Accounts Payable
- Accounts Receivable
- Accumulated Depreciation-Building
- Accumulated Depreciation-Equipment
- Administrative Expenses
- Admissions Revenue
- Advertising Expense
- Allowance for Doubtful Accounts
- Bad Debt Expense
- Buildings
- Cash
- Common Stock
- Cost of Goods Sold
- Current Maturity of Long-Term Debt
- Delivery Expense
- Depreciation Expense
- Dividends
- Dues Revenue
- Equipment
- Green Fees Revenue
- Income Summary
- Income Tax Expense
- Insurance Expense
- Interest Expense
- Interest Payable
- Interest Receivable
- Interest Revenue
- Inventory
- Land
- Maintenance and Repairs Expense
- Mortgage Payable
- No Entry
- Notes Payable
- Notes Receivable
- Office Expense
- Owner's Capital
- Owner's Drawings
- Prepaid Advertising
- Prepaid Insurance
- Prepaid Rent
- Property Tax Expense
- Property Tax Payable
- Rent Expense
- Rent Receivable
- Rent Revenue
- Retained Earnings
- Salaries and Wages Expense
- Salaries and Wages Payable
- Sales Discounts
- Sales Returns and Allowances
- Sales Revenue
- Selling Expenses
- Service Revenue
- Subscription Revenue
- Supplies
- Supplies Expense
- Telephone and Internet Expense
- Utilities Expenses
- Unearned Admissions Revenue
- Unearned Dues Revenue
- Unearned Service Revenue
- Unearned Rent Revenue
- Unearned Subscriptions Revenue
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