Cash Transaction
Essay by msmith • July 3, 2016 • Coursework • 2,678 Words (11 Pages) • 1,448 Views
Cash Transactions
Marisol Smith
AIU
6/12/2016
Draft
Accounting is nothing but “the language of business” without it the health of a corporation is unknown. Basically accounting is the instrument to keep record of a company's doings. Corporations utilize accounting to maintain books from the business in which registers has been made to give details, and be able to determine financial proceedings and dealings that have an effect on the organization. So before starting any business is recommendable to know the basic of accounting to be maintained records of the cash flow and expenses.
Cash Transactions
The following cash transactions took place during March, the first month of business for Cats and Dogs Company:
- D.C. Dawg started a business, Cats and Dogs Company, by contributing $6000.
- The Cats and Dogs Company borrowed $2000 from the bank on March 1. The note is a 1-year, 12% note, with both principal and interest to be repaid on February 28 of next year.
- The company earned $900 in revenue.
- Expenses amounted to $650.
- Distribution to owners amounted to $25.
Cats and Dogs Initial Balance Sheet
Assets = Liabilities + Owners Equity
6,000 6,000
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Cats and Dogs Initial Balance Sheet
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Assets = Liabilities + Owners Equity
+6,000 = +2,000 +6,000
+2,000 =
________
8,000 8,000
The Loan is increasing the assets of the company as well increased the liability amount.
Assets = Liabilities + Owners Equity
- +$6,000.00 = + $6,000.00 Capital
- +$2,000.00 = +$2,000.00 Payable
- +$ 900.00 = + $ 900.00 Revenue
- -$ 650.00 = - $ 650.00 Expenses
- -$ 25.00 = - $ 25.00 Distribution
Adjustment +$ 20.00 Interest Payable - $ 20.00 Interest Expenses
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Total $8,225.00 = $2,020.00 + $6,205
Cash Accounts from Cats and Dogs shows on the month of March an increased made through the loan and the revenue minus the expenses and the interest payable to the bank due to the loan. The owner equity is also recording by adding the initial capital plus the revenue minus expenses (misc. expenses, distribution and interest expenses).
Income Statement for the Month Ended on March 31
Revenue $900.00
Expenses - $670.00
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Net Income $230.00
The net income is based on all cash received in the month of March minus all of the expenses.
Statement of Changes in Owners’ Equity for the month Ended March 31
Beginning Capital $ 0.00
Initial Contributions $6,000.00
Net Income for March $ 230.00
Withdrawals $ (25.00)
_______________
Ending Capital $6,205.00
Balance Sheet at March 31
Assets
Cash $8,225.00
_____________
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