On August 1, 2017, prior to the admission of Grant, E and F Enterprises have the following account balances: P 30,000 400,000 36,000 110,000 134,000 38,000 300,000 300,000 Cash Accounts Receivable Allowance for Bad Debts Merchandise Inventory Equipment - net Accounts Payable Erving, Capital Fisher, Capital
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.
![On August 1, 2017, prior to the admission of Grant, E and F Enterprises have the
following account balances:
P 30,000
400,000
36,000
110,000
134,000
38,000
300,000
300,000
Cash
Accounts Receivable
Allowance for Bad Debts
Merchandise Inventory
Equipment - net
Accounts Payable
Erving, Capital
Fisher, Capital
Erving and Fisher share profit and loss on 1:1 ratio. Before the admission of Grant, the
partners agree on the following adjustments to bring the assets and liabilities to their
fair values:
The allowance for Bad Debts should be brought to 10% of the outstanding
accounts receivable.
a.
b.
The current market value of the merchandise inventory is P 140,000.
C.
Accrued expenses of P 4,000 should be recognized in the accounting records.
If Grant purchases 50% of Erving's capital at its adjusted carrying valur 12/15
much is the total assets of the partnership just after the admission of
1.
If Grant is admitted into the partnership upon his investment of P 400,000 for
2/5 interest in capital and profit, what is the total capital of the partnership just
2.
after the admission of Grant?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F833ad454-e222-45d0-af66-6a150e66a2b8%2F47416f7f-0770-4f9e-add6-e7c919e6e226%2Fmbewt8_processed.jpeg&w=3840&q=75)
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