The following balances were extracted from the ledgers of Jamalco Ltd on December 31, 2015: January 1, 2015: $ Purchases Ledger balance b/f- Dr 250,000 Purchases Ledger balances b/f- Cr 1,500,000 Sales Ledger balances b/f- Dr 4,800,000 Sales Ledger balances b/f- Cr 560,000 December 31, 2015: Return outwards 20,000 Discount allowed 390,000 Cash paid to suppliers 1,200,000 Bad debt 80,000 Credit sales for the year 4,200,000 Cheques received from credit customers 4,850,000 Cash sales 100,000 Refunds to credit customers 430,000 Discounts received 120,000 Dishonoured customers cheques 580,000 Cash purchases 30,000 Interest on overdue customers accounts 180,000 Credit purchases for the year 2,650,000 Bad debts recovered 155,000 Refunds to cash customers 90,000 Purchases ledger debit balances 31/12/15 120,000 Interest on overdue suppliers accounts 218,000 Return inwards 35,000 Sales ledger credit balances 31/12/15 65,000 Refunds from credit purchases 365,000 Cash received from debtors 1,450,000 Purchases ledger credit balance 31/12/15 2,873,000 Contra entry 390,000 Sales ledger debit balances, 31/12/15 2,500,000 19.The total in the Sales ledger control Account should be: 20.The total in the Purchases Ledger Control Account should be:
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 balances were extracted from the ledgers of Jamalco Ltd on December 31, 2015:
|
January 1, 2015: |
$ |
|
Purchases Ledger balance b/f- Dr |
250,000 |
|
Purchases Ledger balances b/f- Cr |
1,500,000 |
|
Sales Ledger balances b/f- Dr |
4,800,000 |
|
Sales Ledger balances b/f- Cr |
560,000 |
|
December 31, 2015: |
|
|
Return outwards |
20,000 |
|
Discount allowed |
390,000 |
|
Cash paid to suppliers |
1,200,000 |
|
Bad debt |
80,000 |
|
Credit sales for the year |
4,200,000 |
|
Cheques received from credit customers |
4,850,000 |
|
Cash sales |
100,000 |
|
Refunds to credit customers |
430,000 |
|
Discounts received |
120,000 |
|
Dishonoured customers cheques |
580,000 |
|
Cash purchases |
30,000 |
|
Interest on overdue customers accounts |
180,000 |
|
Credit purchases for the year |
2,650,000 |
|
|
155,000 |
|
Refunds to cash customers |
90,000 |
|
Purchases ledger debit balances 31/12/15 |
120,000 |
|
Interest on overdue suppliers accounts |
218,000 |
|
Return inwards |
35,000 |
|
Sales ledger credit balances 31/12/15 |
65,000 |
|
Refunds from credit purchases |
365,000 |
|
Cash received from debtors |
1,450,000 |
|
Purchases ledger credit balance 31/12/15 |
2,873,000 |
|
Contra entry |
390,000 |
|
Sales ledger debit balances, 31/12/15 |
2,500,000 |
19.The total in the Sales ledger control Account should be:
20.The total in the Purchases Ledger Control Account should be:
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