The following is a list of alphabetically arranged accounts and balances, in highly simplified form, of VILLEGAS Company for the month of July 2018. Accounts Payable P 8,000 Accounts Receivable 14,000 Accumulated Depreciation 2,000 Cash 8,000 Equipment 16,000 Prepaid Insurance 4,000 VILLEGAS, Capital 24,000 VILLEGAS, Drawings 12,000 Rent Income 46,000 Supplies 8,000 Unearned Rent 6,000 Utility Expense 4,000 Wages Expense 20,000 Required: 1. Prepare a 10-column work sheet. 2. Data for adjustment: a. Expired insurance, P2,000 b. Accrued wages, P2,000 c. Unused supplies on hand, P2,000 d. Estimated depreciation on equipment, P2,000 e. Of the Unearned Rent balance, P4,000 has been earned by the end of the month. 3. Prepare Income Statement, Statement of Owner’s Equity and 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 following is a list of alphabetically arranged accounts and balances, in highly simplified form, of VILLEGAS Company for the month of July 2018.
Accounts Payable P 8,000
Accounts Receivable 14,000
Accumulated
Cash 8,000
Equipment 16,000
Prepaid Insurance 4,000
VILLEGAS, Capital 24,000
VILLEGAS, Drawings 12,000
Rent Income 46,000
Supplies 8,000
Unearned Rent 6,000
Utility Expense 4,000
Wages Expense 20,000
Required:
1. Prepare a 10-column work sheet.
2. Data for adjustment:
a. Expired insurance, P2,000
b. Accrued wages, P2,000
c. Unused supplies on hand, P2,000
d. Estimated depreciation on equipment, P2,000
e. Of the Unearned Rent balance, P4,000 has been earned by the end of the month.
3. Prepare Income Statement, Statement of Owner’s Equity and
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