1.An inventory of supplies showed $2,000 were used up. 2. The furniture was purchased for $20,000. It has $0 salvage value and a 5 year useful life. One year of depreciation must be recorded. 3. $3,000 of insurance was purchased for 12 months. $700 of insurance was used. 4. Performed $20,000 of services that was paid for in advance. 5. On last day of the month, performed $6,000 of services for new customer and will be paid next month. 6. Happy cleaners provided $8,000 of cleaning services on the last day of the month. This was a special yearly clean. They will be paid next month. 7. An inventory count revealed there was $7,000 of inventory shrinkage. This was a larger than usual amount of shrinkage. 8. The company estimates bad debt expense to be 1% of credit sales. Assume all sales are made on credit. 9. A company with net assets of $100,000 was purchased for $140,000 one year ago. The current fair value of the company is 110,000. Perform a goodwill impairment test and record an impairment entry if one is needed. 10. The company had a calculated warranty expense of $19,000 on oustanding sales.
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.
life. One year of
larger than usual amount of shrinkage.
made on credit.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
