The following is the post-closing trial balance for the Whitlow Manufacturing Corporation as of December 31, 2020. Account Title Debits Credits Cash 5,800 Accounts receivable 2,800 Inventory 5,800 Equipment 11,800 Accumulated depreciation 4,000 Accounts payable 3,800 Common Stocks 10,000 Retained earnings 8,100 Sales revenue 0 Cost of goods sold 0 Salaries expense 0 Rent Expense 0 Advertising expense 0 Dividends 0 Totals 26,200 26,200 The following transactions occurred during January 2021: Jan. 1 Sold merchandise for cash, $4,300. The cost of the merchandise was $2,2800. The company uses the perpetual inventory system. 2 Purchased equipment on account for $6,300 from the Strong company. 4 Received a $100 invoice from the local newspaper requesting payment for an advertisement that Whitlow placed in the paper on January 2. 8 Sold merchandise on account for $5,800. The cost of the merchandise was $3,600. 10 Purchased merchandise on account for $9,900. 13 Purchased equipment for cash, $700. 16 Paid the entire amount due to the Strong Company. 18 Received $5,600 form customers on account. 20 Paid $700 to the owner of the building for January’s rent. 30 Paid employees $3,800 for salaries for the month of January. 31 Paid a cash dividend of $1,000 to shareholders. 4 Prepare an unadjusted trial balance as of January 31,2021. WHITLOW MANUFACTURING CORPORATION Unadjusted Trial Balance January 31, 2021 Account Title Debits Credits _________________________ ___________ ________ _________________________ ____________ _________ _________________________ ____________ _________ _________________________ _____________ __________ _________________________ ______________ ___________ _________________________ ______________ ___________ _________________________ ______________ ____________ _________________________ ______________ ____________ _________________________ _______________ ____________ _________________________ _______________ _____________ _________________________ _______________ ____________ _________________________ ________________ _____________ _________________________ _______________ _____________ _________________________ ________________ _____________ _________________________ ________________ ____________
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 the post-closing
Account Title Debits Credits
Cash 5,800
Inventory 5,800
Equipment 11,800
Accounts payable 3,800
Common Stocks 10,000
Sales revenue 0
Cost of goods sold 0
Salaries expense 0
Rent Expense 0
Advertising expense 0
Dividends 0
Totals 26,200 26,200
The following transactions occurred during January 2021:
Jan. 1 Sold merchandise for cash, $4,300. The cost of the merchandise was $2,2800. The company uses the perpetual inventory system.
2 Purchased equipment on account for $6,300 from the Strong company.
4 Received a $100 invoice from the local newspaper requesting payment for an advertisement that Whitlow placed in the paper on January 2.
8 Sold merchandise on account for $5,800. The cost of the merchandise was $3,600.
10 Purchased merchandise on account for $9,900.
13 Purchased equipment for cash, $700.
16 Paid the entire amount due to the Strong Company.
18 Received $5,600 form customers on account.
20 Paid $700 to the owner of the building for January’s rent.
30 Paid employees $3,800 for salaries for the month of January.
31 Paid a cash dividend of $1,000 to shareholders.
4 Prepare an unadjusted trial balance as of January 31,2021.
WHITLOW MANUFACTURING CORPORATION
Unadjusted Trial Balance
January 31, 2021
Account Title Debits Credits
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