You have recently been hired by Bougie Academy as an accounting assistant. Bougie Academy is a private educational institution. During your first month as an employee of Bougie, the school’s accountant was fired. The owner of the school has asked for your help in preparing the next set of financial accounts to 31 October 2021. You eagerly begin to assist with the preparation of the next set of financial accounts to 31 October 2021. Firstly, you locate the account balances related to 30 September 2021:- Cash at bank $267,000; Furniture and fittings $24,000; Equipment $60,000; Capital $351,900; Accounts receivable – T. Steward - $6,900; Accounts payable - R. Maskell- $6,000. Secondly you identify the transactions that occurred during October 2021. 1. On Oct 1 2021, The owner withdrew $7,000 from the business bank account for personal reasons. 2. On Oct 1 2021, Bougie Academy paid $6,000 towards the amount owed to R. Maskell. 3. On Oct 1 2021 Bougie Academy paid business insurance for the next 12 months - $72,000. 4. On Oct 5 2021, The owner purchased a new desk for his office. The desk cost $8,000. 5. On Oct 10 2021, Bougie Academy purchased supplies for the business - $21,000. 6. On Oct 15 2021,Bougie Academy paid (late) the rent on the building for the month of October 2021 - $12,000. 7. On Oct 15 2021, Bougie Academy hired a new accountant. 8. On Oct 21 2021, received $5,400 from T. Steward. The Owner of the company also makes you aware of other facts which need to be reflected in the October 2021 accounting reports. He has provided you with documentary evidence of these facts. I. Monthly depreciation to be provided as follows – Furniture and Fittings $600, New desk $200 and Equipment $3,000. II. Salary of $5,000 is owed to the old accountant. III. A stock count revealed that $17,000 worth of supplies is on hand. IV. During October, billed students - $75,000. However by the end of October, $65,000 worth of invoices had not been paid. Based on all the information received, please prepare in proper format, the financial statements for Bougie Academy for October 2021. . a. The Income Statement. b. The Statement of owner’s equity. c. The Balance sheet.
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.
You have recently been hired by Bougie Academy as an accounting assistant. Bougie Academy is a private educational institution. During your first month as an employee of Bougie, the school’s accountant was fired. The owner of the school has asked for your help in preparing the next set of financial accounts to 31 October 2021.
You eagerly begin to assist with the preparation of the next set of financial accounts to 31 October 2021. Firstly, you locate the account balances related to 30 September 2021:- Cash at bank $267,000; Furniture and fittings $24,000; Equipment $60,000; Capital $351,900; Accounts receivable – T. Steward - $6,900; Accounts payable - R. Maskell- $6,000.
Secondly you identify the transactions that occurred during October 2021.
1. On Oct 1 2021, The owner withdrew $7,000 from the business bank account for personal reasons.
2. On Oct 1 2021, Bougie Academy paid $6,000 towards the amount owed to R. Maskell.
3. On Oct 1 2021 Bougie Academy paid business insurance for the next 12 months - $72,000.
4. On Oct 5 2021, The owner purchased a new desk for his office. The desk cost $8,000.
5. On Oct 10 2021, Bougie Academy purchased supplies for the business - $21,000.
6. On Oct 15 2021,Bougie Academy paid (late) the rent on the building for the month of October 2021 - $12,000.
7. On Oct 15 2021, Bougie Academy hired a new accountant.
8. On Oct 21 2021, received $5,400 from T. Steward.
The Owner of the company also makes you aware of other facts which need to be reflected in the October 2021 accounting reports. He has provided you with documentary evidence of these facts.
I. Monthly
II. Salary of $5,000 is owed to the old accountant.
III. A stock count revealed that $17,000 worth of supplies is on hand.
IV. During October, billed students - $75,000. However by the end of October, $65,000 worth of invoices had not been paid.
Based on all the information received, please prepare in proper format, the financial statements for Bougie Academy for October 2021. .
a. The Income Statement.
b. The Statement of owner’s equity.
c. The Balance sheet.
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