You are the accountant for Tina's Office Supplies, a brand new company and have been given the following transactions to record. All transactions occurred during the first month of operations in August 2023. The company policy is to present any products to be sold as an inventory asset, not an expense. Date August 1/23 August 3/23 August 3/23 August 3/23 August 5/23 August 6/23 August 9/23 August 15/23 August 16/23 August 22/23 August 23/23 August 23/23 August 28/23 August 31/23 Description Issued shares in exchange for $152,000 cash. Purchased land and building for $72,000 cash (Land value is $17,000 and building is $55,000) Purchased materials (inventory) for cash of $27,900 Purchased equipment for $20,000 using a bank loan. Purchased materials (inventory) on account for $62,200 Paid equipment rent for the month of 2,400 using cash. Purchased the following expenses on account: Advertising $2,310; Office expenses $2,150; Utilities $3,720 A cash payment of $22,200 is made towards the supplies purchased on August 5/23 A customer orders goods for $33,600 on account. The customer who purchased on account on August 16/23, pays cash on their account balance of $13,600 Goods are sold for $45,100 cash. A loan payment is made for $2,500 cash. A dividend is declared and paid by cash in the amount of $6,500 Wages of $14,390 are paid using cash.
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.
please answer within the format by providing formula the detailed working
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Please provide answer in text (Without image)
Step by step
Solved in 3 steps
