Opening Trial Balance

Account titles Debit Credit

Cash 4,661
Acc Rec 3,200
Supplies 2,000
Equip 11,000
AD Equip 1,250
Acc Pay 2,500
Unearned service revenue 550
Share Cappital - Ordinary 13,061
Dividends 1,100
Salaries and wages Pay
Retained earning
INCOME SUMMARY

Service revenue 6,300

Salaries and wages Ex 1,300
Miscellaneous Expense 400
Supplies Ex
AD Ex
Sub Total 23,661 23,661
Net income
Final total

Income Statement
Revenue
Service Revenue 6,590
Expenses
Salaries and Wages Expense 2,000
Miscellaneous Expense 400
Supplies Expense 1,520
Depreciation Expense 250
Total expenses 4,170
Net income 2,420
 ADJUSTING ENTRIES
1 Dr Sup Ex 1520
Cr Sup 1520
2 Dr Depre Ex 250
Cr AD 250
3 Dr Unrev Ser 290
Cr Rev 290
4 Dr SW Ex 700
Cr SW pay 700
 Adjustments Adjusted TB Income statement
Debit Credit Debit Credit Debit
4,661
3,200
1,520 480
11,000
250 1,500
2,500
290 260
13,061
1,100
700 700

290 6,590
700 2,000 2,000
400 400
1,520 1,520 1,520
250 250 250
2,760 2,760 24,611 24,611 4,170
2,420
6,590

Retained Earnings Statement

RE, opening -
Add: Net income 2,420
Less: Dividends 1,100
RE, ending 1,320
 Closing entries
1/ To close Revenue
Dr Rev 6,590
Cr Income Summary 6,590
2/ To close Expense
Dr Income Summary 4,170
Cr Salaries and Wages Ex 2,000
Cr Miscellaneous Ex 400
Cr Supplies Ex 1,520
Cr Depreciation Ex 250
3/ K/c Income Summary (911) -> RE (421)
Dr Income Summary 2,420
Cr RE 2,420
Income statement BS and Stmt Of Owner’s Equity Closing entries
Credit Debit Credit Debit Credit
4,661
3,200
480
11,000
1,500
2,500
260
13,061
1,100
700

4,170 6,590
2,420
6,590 6,590
2,000
400
1,520
250
6,590
2,420
6,590 20,441 20,441

Statement of Financial Position

NCA:
Equipment 11000.000
Accumulated Depreciation—Equipment (1,500)
CA:
Supplies 480
Accounts Receivable 3,200
Cash 4661.000
Total assets 17,841
Equity and Liabilities
Equity
Share Capital—Ordinary 13,061
Retained Earnings 1320.000
Total equity 14,381
Liabilities
Accounts Payable 2,500
Unearned Service Revenue 260
Salaries and Wages Payable 700
Total liabilities 3,460
Total equity and liabilities 17,841
 Post-closing TB
Debit Credit
4,661
3,200
480
11,000
1,500
2,500
260
13,061
1,100
700
2,420

20,441 20,441
Account titles Adjusted TB
Debit Credit
Cash 6,461
Accounts Receivable 10,800
Supplies 1,500
Prepaid Insurance 2,000
Equipment 27,000
Accumulated Depreciation—Equipment 5,600
Notes Payable 15,000
Accounts Payable 6,100
Salaries and Wages Payable 3,600
Interest Payable 600
Share Capital—Ordinary 12,161
Retained Earnings 2,000
Dividends 7,600
INCOME SUMMARY

Service Revenue 61,000

Advertising Expense 9,000
Supplies Expense 4,000
Depreciation Expense 5,600
Insurance Expense 3,500
Salaries and Wages Expense 28,000
Interest Expense 600
Totals 106,061 106,061
Net income
Final Total

Income Statement
Revenue
Service Revenue 61,000
Expenses
Advertising Expense 9,000
Supplies Expense 4,000
Depreciation Expense 5,600
Insurance Expense 3,500
Salaries and Wages Expense 28,000
Interest Expense 600
Total expenses 50,700
Net income 10,300

Closing entries
1/ To close Revenue
Dr Rev 61,000
Cr Income Summary 61,000
2/ To close Expense
Dr Income Summary 50,700
Cr Advertising Expense 9,000
Cr Supplies Expense 4,000
Cr Depreciation Expense 5,600
Cr Insurance Expense 3,500
Cr Salaries and Wages Expense 28,000
Cr Interest Expense 600
3/ K/c Income Summary (911) -> RE (421)
Dr Income Summary 10,300
Cr RE 10,300
 Income statement BS and Stmt Of Owner’s Equity
Debit Credit Debit Credit
6,461
10,800
1,500
2,000
27,000
5,600
15,000
6,100
3,600
600
12,161
2,000
7,600

61,000
9,000
4,000
5,600
3,500
28,000
600
50,700 61,000
10,300 10,300
55,361 55,361

Retained Earnings Statement Statement of Financial Position

RE, opening 2,000 NCA:
Add: Net income 10,300 Equipment
Less: Dividends 7,600 Accumulated Depreciation—Equipment
RE, ending 4,700 CA:
Supplies
Accounts Receivable
Cash
Prepaid Insurance
Total assets
Equity and Liabilities
Equity
Share Capital—Ordinary
Retained Earnings
Total equity
Liabilities
Accounts Payable
Notes Payable
Interest Payable
Salaries and Wages Payable
Total liabilities
Total equity and liabilities
 Closing entries Post-closing TB
Debit Credit Debit Credit
6,461
10,800
1,500
2,000
27,000
5,600
15,000
6,100
3,600
600
12,161
4,700

50,700 61,000
10,300
61,000
9,000
4,000
5,600
3,500
28,000
600

47,761 47,761

Statement of Financial Position

27,000
ed Depreciation—Equipment -5,600

1,500
Receivable 10,800
6,461
urance 2,000
s 42,161
d Liabilities

tal—Ordinary 12,161
arnings 4,700
y 16,861

ayable 6,100
ble 15,000
yable 600
d Wages Payable 3,600
ities 25,300
y and liabilities 42,161
 JOURNALIZE TRANSACTION ENTRIES
1-Jul Dr Cash 21,161
Cr Share Capital—Ordinary 21,161
1-Jul Dr Truck 12,000
Cr Cash 4,000
Cr AP 8,000
3-Jul Dr Sup 2,100
Cr AP 2,100
5-Jul Dr Prepaid Insurance 1,800
Cr Cash 1,800
12-Jul Dr AR 4,500
Cr Rev Ser 4,500
18-Jul Dr AP 1,500
Cr Cash 1,500
Dr AP 1,400
Cr Cash 1,400
20-Jul Dr SW Ex 2,800
Cr Cash 2,800
21-Jul Dr Cash 3,400
Cr AR 3,400
25-Jul Dr AR 6,000
Cr Rev Ser 6,000
31-Jul Dr Gas Ex 350
Cr Cash 350
31-Jul Dr Dividens 5,661
Cr Cash 5,661
 Trial Balance Adjustments
Accounts Title Debit Credit Debit Credit
Cash 7,050
Accounts Receivable 7,100 2,700
Supplies 2,100 1,500
Prepaid Insurance 1,800 150
Equipment 12,000
Accounts Payable 7,200
Share Capital—Ordinary 21,161
Dividend 5,661
SW Pay 1,000
AD - Equip 500
Retaines Earning
Income Summary

Service Revenue 10,500 2,700

Gasoline expenses 350
Salaries and Wages expenses 2,800 1,000
Depre Ex 500
Insurance Ex 150
Sup Ex 1,500
Total 35,711 28,361 2,700 3,150
Net Income
Final total

Income Statement Retained Earnings Statement

Revenue RE, opening -
Service Revenue 13,200 Add: Net income 6,900
Expenses Less: Dividends 5,661
Gasoline Expenses 350 RE, ending 1,239
Supplies Expense 1,500
Depreciation Expense 500
Insurance Expense 150
Salaries and Wages Expense 3,800
Total expenses 6,300
Net income 6,900
 Adjusted TB Income statement BS and Stmt Of Owner’s Equit
Debit Credit Debit Credit Debit
7,050 7,050
9,800 9,800
600 600
1,650 1,650
12,000 12,000
7,200
21,161
5,661 5,661
1,000
500

13,200 13,200
350 350
3,800 3,800
500 500
150 150
1,500 1,500
36,761 29,861 - 13,200
13,200

Statement of Financial Position

NCA:
Equipment 12,000
Accumulated Depreciation—Equipment -500
CA:
Supplies 600
Accounts Receivable 9,800
Cash 7,050
Prepaid Insurance 1,650
Total assets 30,600
Equity and Liabilities
Equity
Share Capital—Ordinary 21,161
Retained Earnings 1,239
Total equity 22,400
Liabilities
Accounts Payable 7,200
Salaries and Wages Payable 1,000
Total liabilities 8,200
Total equity and liabilities 30,600
Stmt Of Owner’s Equity Closing entries Post-closing TB
Credit Debit Credit Debit Credit
7,050
9,800
600
1,650
12,000
7,200 7,200
21,161 21,161

1,000 1,000
500 500
1,239
6,300 13,200
6,900
13,200
350
3,800
500
150
1,500

13,200
36,761 29,861 31,100 31,100
 1-Mar Dr Petty Cash 100
Cr Cash 100
5-Mar Dr Ex 39
7-Mar Dr Freight out 21
9-Mar Dr Mi Ex 6
11-Mar Dr travel Ex 24
14-Mar Dr Mi Ex 5
Dr Cash and overshort 3
Cr Cash 98
Cash balance per bank 3,560
Less: Outstanding checks 730
Add: Deposits in transit 530
Adjusted balance per bank 3,360.2

Cash balance per books 3,875

Less: NSF check 490
Less: Bank service charge 25
Adjusted balance per books 3360.200

Dr AR 490
Cr Cash 490
Dr Bank ser Ex 25
Cr Cash 25
Cash balance per bank 7,263
Less: Outstanding checks 591
Add: Deposits in transit 1,300
Adjusted balance per bank 7,972

Cash balance per books 7,284

Bank collect 700
Interst 36
fee 20
Less: Bank service charge 28
Adjusted balance per books 7,972

Dr bank ser Ex 28
Cr Cash 28
July
Deposits in transit
Deposits per book in july 15,750
Deposits per bank in july 15,600
Deposits in transit, june 30 920
Deposits in transit, july 31 1,070
Out Standing check
Check per book in july 17,200
Check per bank in july 16,400
Out Standing check, june 30 680
Out Standing check, july 31 1,480

September Deposits in transit

Deposits per bank in september 26,700
Deposits in transit, september 30 2,100
Total 28,800
Deposits per bank in september 26,400
Deposits in transit, august 31 2,400
Out Standing check
Check per bank in septemper 25,000
Out Standing check, september 30 2,100
Total 27,100
Cash disbursements per books 23,700
Out Standing check, august 31 3,400
 Indriect methor for OCF
Net Income 38000
Adjust
Non cash items
Depre Ex 24000
Bad debt Ex (exclude the ICF and FCF)
Non operating items 0
Gain on retirement of bonds (16000)
Loss on sale of plant assets 6000
Change in CA and CF
Change of AR (20000)
Chage of Mi (14000)
Change of Prepaid Ex (2000)
Change of AP (5000)
Change of Interest Payable (1000)
Change of tax payable 10000
20000

note 5
 ICF
Plant assets Depre PA
210000 48000
(note 2) 70000 30000 (note 3) 12000
24000

250000 60000

Step 2
Purchase PPE
Dr PPE 70000
Cr Bond Payable 60000 Disclose below CFS
Cr Cash 10000 Cash Payment
Dispo PPE
Dr Cash 12000 Cash receipt
Dr AD 12000
Cr loss on sale 6000
Cr PPE 30000

Present ICF
Cash payment -10000
Cash receipt 12000
Net ICF 2000

FCF
Bond payable Share captital
64000 80000
60000 note 2 15000 note 4
34000

90000 95000

Step 2
Bond payable
Dr Bond Payable 34000
Cr Cash 18000
Cr gain 16000
Share captital
Dr Cash 15000
Cr Share captital 15000

Retained Earning
Dr Dividens payable 14000
Cr Cash 14000

Present FCF
Cash payment -32000
Cash receipt 15000
Net FCF -17000

OCF + ICF +FCF = 20000 + 2000 - 17000 = 5000

 NV1 OCF
2 ICF vs FCF
Dr Depre ex 24000 3 ICF vs OCF
Cr AD PPE 24000 4 FCF
5 FCF
6 FCF

Retained Earning
88000
14000 note 6

112000
 Indriect methor for OCF
Net Income 60150
Adjust
Non cash items
Depre Ex 25500
Bad debt Ex (exclude the ICF and FCF)
Non operating items
Loss on retirement of bonds 825
Loss on sale of plant assets 3300
Change in CA and CF
Change of AR 5700
Chage of Mi (9525)
Change of Prepaid Ex (1950)
Change of AP (4950)
Change of Interest Payable 0
Change of tax payable 675
79725
ICF
Equip Depre Equip
146700 47550
21375 25500
10500 11100

135825 61950

Step 2
Dispo equip
Dr Cash 6975
Dr AD 11100
Cr Equip 21375
Dr Loss on sale 3300
Purchase Equip
Dr Equip 10500
Cr Cash 10500
Present ICF
Cash payment (10500)
Cash receipt 6975
Net ICF (3525)

FCF
Bond payable Share captital
37500
37500

Step 2
Dr Bond payable 37500
Dr Loss on retirement of bond 825
Cr Cash 38325

Dr Retained earning 14250

Cr Dividens 14250
Dr Dividens payable 18750
Cr Cash 18750

Present FCF
Cash payment 57075
Cash receipt 0
Net FCF (57075)

OCF + ICF + FCF = 79725 - 3525 - 57075 = 19125

Dr Depre Ex 25500
Cr AD 25500

Retained Earning
62100
60150
14250

108000
a/
Retained earnings beginning of year 250,000
Net income 77,200
Cash dividends 16,000
Stock dividends 11,200
Retained earnings, end of year 300,000

b/
Ordinary shares 150,200
Dividends
Cash outflow for dividends 16,000

c/ Both of the above activities would be classified as financing activities on the statement of c
on the statement of cash flows.
Net income 1,450,000
Adjustments:
Depreciation ex 85,000
Accounts receivable increased (200,000)
inventory decreased 500,000
Prepaid expenses increased (175,000)
Accounts payable decreased (340,000)
Accrued expenses payable decreased (105,000)
Cash from operations 1,215,000
Net income 226000
Adjustments:
1/Non-cash items:
Depreciation expense 55000
Accounts receivable increase -15000
Accounts payable increase 14000
Taxes payable increase 6000
2/Non-operating items:
Loss on disposal of plant assets 25000
Cash from operations 311000
Net income 32,000
Adjustment:
Depreciation ex 13,300
Accounts receivable increased -19,000
Inventory increased -10,000
Decreased tax payable -1,000
Accounts payable increased 14,000
Cash from operations 29,300
Devidens payment -20,000
Free CF 9,300
Net income 172,900
Adjustment:
Depreciation expense 45,000
Gain on sale of plant assets -5,000
Increase in accounts payable 44,700
Decrease in accrued expenses payable -500
Increase in prepaid expenses -3,300
Increase in inventory -9,650
Increase in accounts receivable -59,800
Cash from operations 184,350
Direct methor
Sale AR
590000 40000
590000
570000
60000

Cash AP
40000
319000 314000
319000

35000

Cash Prepaid Ex
4000
216000
218000 218000

6000

Cash Interest Payable

4000
7000
8000 8000

3000

Cash Income tax pay

12000
15000
5000 5000

22000

Presentation on OCF
1/ Cash receipt from sale 570000
2/ Cash payment for inven -319000
3/ Cash payment for operating ex -218000
4/ Cash payment for interest ex -8000
5/ Cash payment -5000
Net OCF 20000
 Cash

570000

MI COGS
70000
300000 300000
314000

84000

Operating Ex
216000

Interest Ex
7000

Income tax Ex
15000
Cash AP MI
40000 70000
319000 314000 300000
319000 314000

35000 84000
 COGS

300000