The general ledger of Zips Storage at January 1, 2021, includes the following account balances:Accounts Debits CreditsCash $ 24,600Accounts Receivable 15,400Prepaid Insurance 12,000Land 148,000Accounts Payable $ 6,700Deferred Revenue 5,800Common Stock 143,000Retained Earnings 44,500Totals $200,000 $200,000The following is a summary of the transactions for the year:1. January 9 Provide storage services for cash, $134,100, and on account, $52,200.2. February 12 Collect on accounts receivable, $51,500.3. April 25 Receive cash in advance from customers, $12,900.4. May 6 Purchase supplies on account, $9,200.5. July 15 Pay property taxes, $8,500.6. September 10 Pay on accounts payable, $11,400.7. October 31 Pay salaries, $123,600.8. November 20 Issue shares of common stock in exchange for $27,000 cash.9. December 30 Pay $2,800 cash dividends to stockholders.Required:1. Set up the necessary T-accounts and enter the beginning balances from the trial balance. In addition to the accounts shown, the company has accounts for Supplies, Dividends, Service Revenue, Salaries Expense, Property Tax Expense, Supplies Expense, and Insurance Expense.2. Record each of the summary transactions listed above.3. Post the transactions to the accounts.4. Prepare an unadjusted trial balance.5. Record adjusting entries. Insurance expired during the year is $7,000. Supplies remainingon hand at the end of the year equal $2,900. Provide services of $11,800 related to cashpaid in advance by customers.6. Post adjusting entries.7. Prepare an adjusted trial balance.8. Prepare an income statement for 2021 and a classified balance sheet as of December 31, 2021.9. Record closing entries.10. Post closing entries11. Prepare a 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.
The general ledger of Zips Storage at January 1, 2021, includes the following account balances:
Accounts Debits Credits
Cash $ 24,600
Prepaid Insurance 12,000
Land 148,000
Accounts Payable $ 6,700
Deferred Revenue 5,800
Common Stock 143,000
Retained Earnings 44,500
Totals $200,000 $200,000
The following is a summary of the transactions for the year:
1. January 9 Provide storage services for cash, $134,100, and on account, $52,200.
2. February 12 Collect on accounts receivable, $51,500.
3. April 25 Receive cash in advance from customers, $12,900.
4. May 6 Purchase supplies on account, $9,200.
5. July 15 Pay property taxes, $8,500.
6. September 10 Pay on accounts payable, $11,400.
7. October 31 Pay salaries, $123,600.
8. November 20 Issue shares of common stock in exchange for $27,000 cash.
9. December 30 Pay $2,800 cash dividends to stockholders.
Required:
1. Set up the necessary T-accounts and enter the beginning balances from the
2. Record each of the summary transactions listed above.
3.
4. Prepare an unadjusted trial balance.
5. Record
on hand at the end of the year equal $2,900. Provide services of $11,800 related to cash
paid in advance by customers.
6. Post adjusting entries.
7. Prepare an adjusted trial balance.
8. Prepare an income statement for 2021 and a classified balance sheet as of December 31, 2021.
9. Record closing entries.
10. Post closing entries
11. Prepare a post-closing trial balance.
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