Directions: Do the task listed below using the transactions of Matapang Company for December 2019. Write your answers on a separate sheet of paper. 1. Prepare the journal entries. 2. Post each transaction to its ledger account. 3. Prepare the trial balance. 4. Use the provided account numbers. Ralph Matapang established Happy Repair Business. The following are the transactions for the month of December 2019. Dec. 1 He invested P150,000 in the firm. 2. He paid P8,000 for monthly rent. He bought supplies on account amounting to P7,200. He purchased office equipment amounting to P75,000, paid P37,000 and the balance on account. 2. 3. He paid accounts payable for supplies purchased worth P7,200. He paid P6,000 for the salary of an employee. He received P20,000 for services rendered. 8. 14. 20. 28. He billed clients P48,000 for services on account. 31. Matapang withdrew P12,000 for his personal use. 101 Cash 302 Matapang, Drawings 102 Accounts Receivable 401 Service Revenue 501 Salaries Expense 103 Supplies 104 Office Equipment 201 Accounts Payable 301 Matapang, Capital 502 Rent Expense 503 Utilities Expense 504 Other Expense
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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