The following trial balance and additional data are related to W en Teng Distributing Company. Wen Teng Company Trial Balance as at December 31, 1993 Dr Cr $ $ Cash 5,670 Accounts Receivable 37 100 Inventory 60,500 Supplies 3,930 Prepaid Rent 6,000 Furniture and fixtures 26,500 Accumulated Depreciation 21,200 Accounts Payable 46,340 Salary Payable Interest Payable Unearned Sales Revenue 3,500 Note Payable, Long Term 35,000 Wen Teng, Capital 23,680 Wen Teng, Withdrawals 48,000 Sales Revenue 346,700 Sales Discounts 10,300 Sales Returns and Allowances 8,200 Cost of Goods Sold 171,770 Salary Expense 82,750 Rent Expense 7,000 Depreciation expense Utilities Expense 5,800 Supplies Expense Interest Expense 2,900 _______ Total 476,420 476,420 5 - 5 - Additional Data at December 31, 1993: a) Supplies used during the year $2 580. b) Prepaid rent in force, $1 000 c) Unearned sales revenue still not earned, $2 400. The company expects to earn this amount during the next few months. d) Depreciation. The furniture and fixtures’ estimated useful life is 1 0 years, and they are expected to be worthless when they are retired from service. e) Accrued salaries, $1 300. f) Accrued interest expense, $600. g) Inventory on hand, $65 800. Required: i) Adjusting journal entries ii) Accounting worksheet. iii) A multi-step income statement, statement of owner’s equity and a balance sheet. iv) Prepare the necessary closing entries.?
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.
Introduction:
Generally Adjusting entries are being done at the end of the financial year due transaction happens after closing of books. adjusted journal entries are journal entries recorded at the end of an accounting period to alter the ending balances of various general ledger for entering some adjusted transactions.
Worksheets are usually prepared at the end of the accounting period and usually include account balances, list of accounts, adjustments to each account, and each account’s adjusted balance all sorted in financial statement order. After a worksheet is completely filled out than preparing financial statements manually is very simple. Most of the preparation work takes into drafting the worksheets.
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