The following transactions pertain to Smith Training Company for 2016: Established the business when it acquired $53,000 cash from the issue of common stock. Jan. 30 Feb. 1 Paid rent for office space for two years, $16,100 cash. Apr. 10 Purchased $830 of supplies on account. July Received $27,500 cash in advance for services to be provided over the next year. 20 Paid $623 of the accounts payable from April 10. Aug. 15 Billed a customer $9,300 for services provided during August. Sept. 15 Completed a job and received $2,800 cash for services rendered. Oct. 1 Paid employee salaries of $33,000 cash. 15 Received $9,400 cash from accounts receivable. Nov. 16 Billed customers $34,500 for services rendered on account. Dec. 1 Paid a dividend of $700 cash to the stockholders. 31 Adjusted records to recognize the services provided on the contract of July 1. 31 Recorded $2,050 of accrued salaries as of December 31. 31 Recorded the rent expense for the year. (See February 1.) 31 Physically counted supplies; $130 was on hand at the end of the period. Prepare a trial balance.
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.
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The following transactions pertain to Smith Training Company for 2016:
Established the business when it acquired $53,000 cash from the issue of
common stock.
Jan. 30
Feb. 1 Paid rent for office space for two years, $16,100 cash.
Apr. 10 Purchased $830 of supplies on account.
July
Received $27,500 cash in advance for services to be provided over the next
year.
20 Paid $623 of the accounts payable from April 10.
Aug. 15 Billed a customer $9,300 for services provided during August.
Sept. 15 Completed a job and received $2,800 cash for services rendered.
Oct.
1 Paid employee salaries of $33,000 cash..
15 Received $9,400 cash from accounts receivable.
Nov. 16 Billed customers $34,500 for services rendered on account.
Dec.
1 Paid a dividend of $700 cash to the stockholders.
31 Adjusted records to recognize the services provided on the contract of July 1.
31 Recorded $2,050 of accrued salaries as of December 31.
31 Recorded the rent expense for the year. (See February 1.)
31 Physically counted supplies; $130 was on hand at the end of the period.
c. Prepare a trial balance.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9fe5072a-3761-42d4-a9eb-73b5c07b62bb%2Fbb649e50-766e-4983-880e-de32364b3dc0%2Fbift4fr_processed.jpeg&w=3840&q=75)
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