The unadjusted trial balance for Lamb Company at December 31, 2022 is as follows: LAMB COMPANY Unadjusted Trial Balance Year Ended December 31, 2022 Debit Credit Accounts Receivable $21,000 Supplies 4,600 Prepaid rent 2,200 Equipment 110,000 Accumulated depreciation – equipment $17,000 Bank overdraft 6,000 Accounts Payable 9,800 Note Payable 6,400 Unearned revenue 6,000 K. Lamb, capital 99,000 K. Lamb, drawings 19,500 Service revenue 102,800 Promotion expense 27,000 Insurance expense 5,000 Rent expense 15,000 Salaries expense 36,700 Maintenance expense 6,000 Totals $247,000 $247,000 The following information was prepared by Lamb Company’s controller to help prepare the December 31, 2022 adjusting entries: The company has earned revenue totaling $6,000 that has not been invoiced. The expired portion of prepaid rent is $750. The earned portion of the Unearned revenue at December 31, 2022 is $2,750 Depreciation expense for the Equipment has been calculated as $12,000. Employees have earned but have not been paid salaries of $6,800. Prepare the adjusting entries that Lamb Company should record at the year ended December 31, 2022. Prepare the appropriate reversing entries relating to the adjustments made in (a
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 unadjusted
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LAMB COMPANY Unadjusted Trial Balance Year Ended December 31, 2022 |
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|
|
Debit |
Credit |
|
|
$21,000 |
|
|
Supplies |
4,600 |
|
|
Prepaid rent |
2,200 |
|
|
Equipment |
110,000 |
|
|
|
|
$17,000 |
|
Bank overdraft |
|
6,000 |
|
Accounts Payable |
|
9,800 |
|
Note Payable |
|
6,400 |
|
Unearned revenue |
|
6,000 |
|
K. Lamb, capital |
|
99,000 |
|
K. Lamb, drawings |
19,500 |
|
|
Service revenue |
|
102,800 |
|
Promotion expense |
27,000 |
|
|
Insurance expense |
5,000 |
|
|
Rent expense |
15,000 |
|
|
Salaries expense |
36,700 |
|
|
Maintenance expense |
6,000 |
|
|
Totals |
$247,000 |
$247,000 |
The following information was prepared by Lamb Company’s controller to help prepare the December 31, 2022
- The company has earned revenue totaling $6,000 that has not been invoiced.
- The expired portion of prepaid rent is $750.
- The earned portion of the Unearned revenue at December 31, 2022 is $2,750
- Depreciation expense for the Equipment has been calculated as $12,000.
- Employees have earned but have not been paid salaries of $6,800.
- Prepare the adjusting entries that Lamb Company should record at the year ended December 31, 2022.
- Prepare the appropriate reversing entries relating to the adjustments made in (a)
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