The statement of financial position items for the First Malt Shop arranged in alphabetical order) were as follows at the close of Sept. 30, 2021. Accounts Payable 8,500. Land 55,000 Accts. Receivable 1,250 Share Capital 50,000 Building 45,500 Notes Payable ? Cash 7,400 Retained Earnings 4,090 Equipment 20,000 Supplies 3,440 The transactions occurring during the first week of October were: Oct. 3 Additional share capital was sold for P30,000. The accounts payable were paid in full. (no payment was made on the notes payable) Oct.6 More furniture was purchased on account at a cost of P18,000, to be paid within 30 days. Supplies were purchased for P1000 in cash. Oct.1-6 Revenues of P5500 were earned and paid in cash. Expenses required to earn the revenues worth P4000 were incurred and paid in cash. Required: Statement of financial position Sept. 30, 2021 Statement of financial position at Oct. 6, 2021. Income statement and cash flow statement for the period Oct. 1-6, 2021 (purchase of supplies and payment of accounts payable as operating activities).
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 statement of financial position items for the First Malt Shop
arranged in alphabetical order) were as follows at the close of Sept. 30,
2021.
Accounts Payable 8,500.
Land 55,000
Accts. Receivable 1,250
Share Capital 50,000
Building 45,500
Notes Payable ?
Cash 7,400
Retained Earnings 4,090
Equipment 20,000
Supplies 3,440
The transactions occurring during the first week of October were:
Oct. 3 Additional share capital was sold for P30,000. The accounts payable
were paid in full. (no payment was made on the notes payable)
Oct.6 More furniture was purchased on account at a cost of P18,000, to be
paid within 30 days. Supplies were purchased for P1000 in cash.
Oct.1-6 Revenues of P5500 were earned and paid in cash. Expenses
required to earn the revenues worth P4000 were incurred and paid in cash.
Required:
Statement of financial position Sept. 30, 2021
Statement of financial position at Oct. 6, 2021.
Income statement and
1-6, 2021 (purchase of supplies and payment of accounts
payable as operating activities).
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
