Trial Balance as at 30 September 2021 Dr Cr $ $ Equity 2,300,000 Sales 4,281,923 Purchases 1,893,612 Carriage Outwards 43,000 Drawings 15,000 Rent & Rates 96,000 Stationery 25,962 Advertising 100,000 Salaries & Wages 325,711 Returns 5,296 3,481 Bad Debts 33,250 Rent Receivables 100,000 Provision for Depreciation -Building 390,000 -Motor Vehicle 160,000 -Equipment 450,000 Carriage Inwards 56,009 Bank 25,000 Inventory, 1 October 2017 120,000 Equipment – at cost 1,500,000 Building – at cost 2,600,000 Motor Vehicle – at cost 800,000 Land 1,500,000 Commission Receivable 6,200 Discounts 12,693 32,158 Trade receivables 298,730 Trade payables 226,501 Cash 50,000 Long Term Loan 1,500,000 9,475,263 9,475,263 The following additional information as at 30 September 2021 is available: a) Rent is owing, $15,000. b) Rates has been prepaid by $6,000 c) Provision for doubtful debt is to be set up at a rate of 10% on debtors. d) Depreciation rates are as follows: Equipment - 10 %, using the straight line method Building - 5%, using the straight line method Motor vehicle - 20%, using the reducing balance method e) Inventory at the close of business was valued at $131,000. f) Advertising is prepaid by $20,000 g) Ms. James took $30,000 of goods for personal use and this was not recorded in the books. Rent and rates expense for the period was?
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.
|
|
Dr |
Cr |
|
|
$ |
$ |
|
Equity |
|
2,300,000 |
|
Sales |
|
4,281,923 |
|
Purchases |
1,893,612 |
|
|
Carriage Outwards |
43,000 |
|
|
Drawings |
15,000 |
|
|
Rent & Rates |
96,000 |
|
|
Stationery |
25,962 |
|
|
Advertising |
100,000 |
|
|
Salaries & Wages |
325,711 |
|
|
Returns |
5,296 |
3,481 |
|
|
33,250 |
|
|
Rent Receivables |
|
100,000 |
|
Provision for |
|
|
|
-Building |
|
390,000 |
|
-Motor Vehicle |
|
160,000 |
|
-Equipment |
|
450,000 |
|
Carriage Inwards |
56,009 |
|
|
Bank |
|
25,000 |
|
Inventory, 1 October 2017 |
120,000 |
|
|
Equipment – at cost |
1,500,000 |
|
|
Building – at cost |
2,600,000 |
|
|
Motor Vehicle – at cost |
800,000 |
|
|
Land |
1,500,000 |
|
|
Commission Receivable |
|
6,200 |
|
Discounts |
12,693 |
32,158 |
|
Trade receivables |
298,730 |
|
|
Trade payables |
|
226,501 |
|
Cash |
50,000 |
|
|
Long Term Loan |
|
1,500,000 |
|
|
9,475,263 |
9,475,263 |
The following additional information as at 30 September 2021 is available:
a) Rent is owing, $15,000.
b) Rates has been prepaid by $6,000
c) Provision for doubtful debt is to be set up at a rate of 10% on debtors.
d) Depreciation rates are as follows:
Equipment - 10 %, using the
Building - 5%, using the straight line method
Motor vehicle - 20%, using the
e) Inventory at the close of business was valued at $131,000.
f) Advertising is prepaid by $20,000
g) Ms. James took $30,000 of goods for personal use and this was not recorded in the books.
Rent and rates expense for the period was?
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