a.
The accounting equation represents the asset side on the left and liabilities and equity on the right side. The basic principle is that all the assets when debited, are increased, and are decreased when credited.
For liability accounts, it is increased when credited and decreased when debited.
Equity accounts are increased by net profit earned, further capital contribution, and decreased by the net loss suffered, dividend distributions, and withdrawals.
Requirement 1
To Create:
A table summarizing the transactions from 1st Dec through 31st Dec in accounting equation format and drawing balances for each account after every transaction occurred.
b.
Income Statement:
The income statement is one of the primary financial statements to determine the net operating results, i.e., profit or loss. All the revenue items and expense items are shown here and the expenses are subtracted from the revenues to determine the net profit or loss. When the revenues exceed the expenses, it will be treated as a profit and a loss will occur in case the expenses exceed the revenue.
Statement of
Statement of retained earnings forms part of the financial statement that is prepared as per the applicable financial reporting framework. This statement shows the changes in the retained earnings of the entity for a particular period. It starts with the beginning balance and net income is added to it (in case of loss, it is subtracted). Any dividend distributions are subtracted and the ending balance of retained earnings is reported on the
Balance Sheet:
A balance sheet or statement of financial position is an important part of the financial statements which shows the entity’s position drawn at a particular date. It has two components, namely assets and liabilities & equity. On the asset side, current and non-current assets are shown. On the liabilities and equity side, both current and non-current liabilities are shown under the subcategory of liabilities and equity, and retained earnings are housed under the subcategory of equity.
Requirement 2
To prepare:
Income statement, Statement of retained earnings, and the Balance sheet at the end of the month of December.
c.
Statement of
Statement of cash flows is a report showing changes in cash and cash equivalents for a particular period. The changes in cash can be due to different business activities that are classifiable under three categories.
Requirement 3
To Prepare:
Statement of cash flows for Sony Electric as of December 31st.
d.
Types of Financing:
A business entity can raise its finances through either issuing stocks or by taking out a loan or borrowings from banks or financial institutions. Each one of such forms of financing has its advantages and disadvantages and the capital structure also plays a pivotal role in operating leverage.
Requirement 4
To compute:
The dollar effect of the changes in capital raising on the month-end amounts for total assets, total liabilities, and total equity.
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Chapter 1 Solutions
FINANCIAL+MANAG.ACCT.
- In the process of reconciling Marks Enterprises' bank statement for September, Mr. Marks compiles the following information: Cash balance per company books on September 30 $ 6,270 Deposits in transit at month-end $ 1,310 Outstanding checks at month-end $ 630 Bank charge for printing new checks $ 50 Note receivable and interest collected by bank on Marks' behalf $ 760 A check given to Marks during the month by a customer is returned by the bank as NSF $490. The adjusted cash balance per the books on September 30 is: a. $6,980. b. $6,490. c. $4,550. d. $5,830. e. $8,150.arrow_forwardPROBLEM 1: You obtained the following information on the current account of BUGOY CORP. During your examination of its financial statements for the year ended December 31, 2021. The bank statement on November 30, 2021 showed a balance of P918,000. Among the bank credits in November was customer's note for P300,000 collected for the account of the company which the company recognized in December among its receipts. Included in the bank debits were cost of checkbooks amounting to P3,600 and a P120,000 check which was charged by the bank in error against Bugoy's account. Also in November you ascertained that there were deposits in transit amounting to P240,000 and outstanding checks totaling P510,000. The bank statement for the month of December showed total credits of P1,248,000 and total charges of P612,000. The Company's books for December showed total debits of P2,206,800, total credits of P1,221,600 and a balance of P1,456,800. Bank debit memos for December were: No. 121 for service…arrow_forwardWeave Company received a bank statement for the month of August. The bank statement showed the following information: Balance 1 August $68,326 Deposits 45,300 Cheques processed (63,222) Service charges (50) Monthly deposit into saving account directly (26,120) Deducted by bank from account (780) Balance, 31st August $49,574 Weave Co’s general ledger account had a balance of $78,304 at the end of August. (i) Deposits shown in the general ledger account but not in the bank amounting to $8,200; (ii) all cheques written by the company were processed by the bank except for those totaling $8,420; (iii) A $2,000 cheque to a supplier correctly recorded by the bank but was incorrectly recorded by the company as $200 credit to cash. Required: 1. Prepare a bank reconciliation statement for the month of August. 2. Prepare the necessary journal entries at the end of August to adjust the general ledger cash account.arrow_forward
- Donald’s Company provided the bank statement for the month of December which included the following information: Ending balance, December 31 Php 3,500,000 Bank service charge for December 20,000 Interest paid by bank to Donald’s Company for December 15,000 In comparing the bank statement to its own cash records, the entity found the following: Deposits made but not yet recorded by the bank 500,000 Checks written and mailed but not yet recorded by the bank 750,000 In addition, the entity discovered that it had drawn and erroneously recorded a check for Php 58,000 that should been recorded for Php 85,000. What is the cash balance per ledger on December 31?arrow_forwardAlpha company provided the followinginformation for the month of December: Cash balance per ledger 5,000,000 Cash balance per bank statement 5,500,000 Proceeds of bank loan discounted on December 1 for one year at 14% 516,000 Undeposited collections on December 31300,000 Check of Omega Company had been incorrectly deducted by bank from Alpha Company account 50,000 Check of Alpha Company in payment ofan account payable had been recorded by the depositor as P20,000. The correctamount is 200,000 The ledger account for cash was the only cash account kept by the entity.It included a petty cash account comprised of the following items: Currency and coin 4,000 Supplies 2,000 Transportation 3,000 Postage1,000 Deposit of Omega Company credited by bank to the account of Alpha Company 130,000 Deposit of December 27 omitted from bankstatement 150,000 Outstanding checks 544,000 Requirement: (1) Prepare a bank reconciliation using theadjusted balance approach.(2) Prepare…arrow_forwardPlease provide graph answerarrow_forward
- answer quicklyarrow_forwardQ6: Braden Corporation's bank requires monthly financial statement. On its February 28, 20X1 financial statements, Braden reported total assets $325,000 and total equity of $65,000. On March 1, 20X1 Braden Corporation borrows $80,000 cash from the local bank and immediately upon receiving the funds: (a) Braden paid $28,000 to their vendor, Express Company, representing the amount owed for a purchase of supplies made on account in December 20X0. (b) Braden paid $20,000 for employee work performed in January and February 20X1. (c) Braden purchased $10,000 of new supplies from Express Company (Braden paid cash since Express is no longer allowing Braden to purchase supplies on account). Consider the company's accounting equation as of March 31st 20X1 and select the answer below that correctly describes the company's total liabilities as of this date (ignoring loan interest): A. $340,000 B. $312,000 C. $292,000 D. $282,000 E. None of the answers provided are correct.arrow_forwardNeed answer of this Questionarrow_forward
- answer in text with all workarrow_forwardPrepare the journal entry of the following merchandise transactions for the month of January. Note: All cash disbursements are made through checks. Ignore taxes. Jan. 2 Invested cash to the business and set up the company’s bank account thru BDO, P1,200,000. Jan. 3 Purchased office equipment to Southbound Computer Center for business use, P50,000. Payment terms: Open account, n/30 Jan. 4 Paid 1-year annual rent in advance, P60,000. Asset method will be used. Jan. 5 Purchased the following merchandise from Rebis Co.:• 300 reams of bond paper (P300 list price per ream)• 500 pieces of ballpen (P5 list price per piece)• 100 pieces of standard calculator (P400 list price per piece)Payment terms: Trade discount on total cost of 10%, cash discount of 2/10, n/30. Jan. 6 Paid freight costs on January 5 purchase, P1,000. Jan. 7 Contract signing with her assistant, with an average salary rate of P300/day. Jan. 9 Returned 5 pieces of standard calculator to Rebis Co. due to product defects.…arrow_forwardHelp Save A company's Cash account shows a balance of $3,410 at the end of the month. Comparing the company's Cash account with the monthly bank statement reveals several additional cash transactions such as bank service fees ($60), an NSF check from a customer ($330), a customer's note receivable collected by the bank $(1,500), and interest earned $(190). Prepare the necessary entries to adjust the balance of cash. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) View transaction list А Record the entries that increase cash. Record the entries that decrease cash. Credit Note : = journal entry has been entered %3D Record entry Clear entry View general journal EX:arrow_forward
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