Prepare the necessary adjusting entries for the year at December 31, 20x2. 1. The note amounting to P500,000 was received from a customer on October 1, 20x2 with an interest of 12% per annum. Advance interest for one year was collected on the same 2. The Expense-Insurance of P24.000 shown in the unadjusted trial balance represents date and credited to Income Interest. premium for one year beginning March 1, 201x2. 3. Office supplies in the amount of P12,000 was purchased on January 2, 20x2 and debited to Expense-Office Supplies Unused office supplies at December 31, 20x2 amounted to P2,500 4. The Expense-Rent for P90,000 is advance payment for six months beginning June 16, 20x2 5. The Interest Income of P24,000 was received on August 1, 20x2 from an issuer for a one year note of P240.000 at 10% per annum 6. The Note Payable for P1,000,000 is a loan proceeds from a Bank on October 16, 20x2 with interest rate of 6% per annum. The interest for one year was deducted in advance by the bank and was debited to Expense-Interest. 7. The Rent Income of P48,000 was received from a tenant on September 30, 20x2 as advance rental for four months
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.
Prepare the necessary
1. The note amounting to P500,000 was received from a customer on October 1, 20x2 with an interest of 12% per annum. Advance interest for one year was collected on the same
2. The Expense-Insurance of P24.000 shown in the unadjusted
3. Office supplies in the amount of P12,000 was purchased on January 2, 20x2 and debited to Expense-Office Supplies Unused office supplies at December 31, 20x2 amounted to P2,500
4. The Expense-Rent for P90,000 is advance payment for six months beginning June 16, 20x2
5. The Interest Income of P24,000 was received on August 1, 20x2 from an issuer for a one year note of P240.000 at 10% per annum
6. The Note Payable for P1,000,000 is a loan proceeds from a Bank on October 16, 20x2 with interest rate of 6% per annum. The interest for one year was deducted in advance by the bank and was debited to Expense-Interest.
7. The Rent Income of P48,000 was received from a tenant on September 30, 20x2 as advance rental for four months
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