Choy, after receiving her degree in Hotel and Restaurant Management began her own business called Choy Cakes and Patries. She completed the following transactions soon after the start of the business. Choy began her business with a P150,000 cash investment, which she deposited in the bank and a laptop and printer worth P35,000. Paid one month's rent on a sales outlet space for her business. Rent is P10,000 per month. Choy does her baking at their home and she only needed a display and sales outlet for her products. Purchased an oven worth P70,000 in cash. Purchased baking supplies on account worth P50,000. Purchased baking paraphernalia like pans, etc..worth P20,000, in cash. Received cash for cakes and pastries sold, P40,000 for the month. Billed a customer for the cakes and pastries ordered for a birthday party, P15,000. Paid utilities for the month worth P5000. a. b. C. d. е. f. g. h. Paid her parents for the space being used as baking area at their home, P5000. Determined that baking supplies is now worth P30,000 for the month. From letter D transaction, Choy paid P20,000. Customer from letter G paid his order in full. Choy withdrew P10,000 cash from the business for personal use. i. j. k. 1. m. Required: Analyze the transactions as to their effect on the accounting equation. Show new balances after each transaction. Identify each owner's equity account type. Please use the following account names/ account titles for uniformity: Assets: Cash Accounts receivable Baking supplies Baking tools Oven Office equipment Laibility: Accounts payable Capital: Choy, capital Choy, Withdrawals Sales revenue Rent expense Utilities expense Baking supplies 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.
How much is the balance of the accounts payable?
What is the beginning capital balance of Choy?
How much is the total revenue from sales?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
