The following information concerns the adjusting entries to be recorded on November 30, 2020, for RaiLink's year just ended. a. The Office Supplies account started the year with a $4,800 balance. During 2020. the company purchased supplies at a cost of $24.800. which was added to the Office Supplies account. The inventory of supplies on hand at November 30 had a cost of $6.300. b. An analysis of the company's insurance policies provided these facts: Years of Date of Purchase March 1, 2019 March 1, 2820 July 1, 2020 Coverage Total Cost $ 5,760 22,320 3,780 Policy 2 The total premium for each policy was paid in full at the purchase date, and the Prepaid Insurance account was debited for the full cost. Appropriate adjusting entries have been made to November 30, 2019. c. The company has 15 employees who earn a total of $4.800 in salaries for every working day. They are paid each Wednesday for their work in the five-day workweek ending on the preceding Friday. All 15 employees worked November 23 to 27 inclusive. They will be paid salaries for five full days on Wednesday. December 2. 2020. d. The company purchased a building on July 1. 2020. The building cost $306.000 and is expected to have a $25.000 residual value at the end of its predicted 30-year life. e. Because the company is not large enough to occupy the entire building, it arranged to rent some space to a tenant at $3.100 per month, starting on October 1, 2020. The rent was paid on time on October 1, and the amount received was credited to the Rent Revenue account. However, the tenant has not paid the November rent. The company has worked out an agreement with the tenant, who has promised to pay both November's and December's rent in full on December 15. 1. On October 1, the company also rented space to another tenant for $3.650 per month. The tenant paid five months' rent in advance on that date. The payment was recorded with a credit to the Unearned Rent account. Assume Railink uses the straight-line method to depreciate its assets. For the ease of calculations, assume that Salaries for November 30 is not considered for accrual purposes. Requlred: 1. Use the information to prepare the annual adjusting entries as of November 30, 2020. (Do not round Intermedlate calculations. Round your final answer to nearest whole dollar.) View transaction list
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.
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