Prepare the necessary requirements and use journal, ledger Owner's Equity (300-399) 311 5C's, Capital 312 5C's, Drawing 313 Income Summary Revenue (400-499) 411 Word Process Fees Expenses (500-599) 511 Office Salaries Expense 512 Advertising Expense 513 Telephone Expense 514 Office Supplies Expense 515 Rent Expense 516 Depreciation Expense - Word The Chart of Accounts for 5C's Computer Center appears below: 5C's Computer Center Chart of Accounts Assets (100- 199) 111 Cash 112 Accounts Receivable 114 Office Supplies 115 Prepaid Rent 121 Word Processing Equipment 122 Accumulated Depreciation- Word Processing Equipment Liabilities (200 - 299) 211 Accounts Payable 212 Salaries Payable Processing Equipment The following transactions took place in May 2021. May 1-5C's began the business by investing P 100,000 in cash. 1- Purchased Word Processing Equipment from ABC Co. for P60,000, paying P10,000 and promising to pay the balance within 30 days. 1 - Rented office space paying P12,000 in advance for the first three months. 3- Purchased office supplies from Office Depot Co. on account, P6,000. 7- Completed sales promotion flyers for a client and immediately collected P30,000. 13- paid Office salaries, P6,500. 18 - Advertising bill from Balita Co. comes in but is not paid, P2,500. 20-5C's wrote a check on the bank account of the business as personal withdrawal of cash to pay his home mortgage of P6,250. 22 - Billed Luzonian Co for a special word processing job, P 50,000 28- Paid Half of the amount owed for Word Processing Equipment purchased on May 1 from ABC Co., P25,000. 29- Received and paid telephone bill, P2,200. 30 On this date, the accountant: (a) Found out that company had only P1,000 worth supplies on hand. (b) Realized that the company has two months prepaid rent (c) Determined that the computer equipment should be depreciated over its 5-year useful life with estimated residual salvage value of P12,000 (d) Determined that unpaid salary of P3,500 has not recorded. Requirements: 1. Analyze and journalize the transactions for the May, 2021 of 5C's Computer Center. 2. Post journal entries to the ledger 3. Prepare Unadjusted Trial Balance as of May 31, 2021. 4. Journalize the necessary adjusting entries. 5. Prepare Worksheet 6. Prepare the financial statements: a) Income Statement b) Statement of Changes in Owner's Equity c) Balance Sheet 7. Prepare Closing entries 8. Prepare the Post-closing Trial Balance
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.
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