6Transaction+Processing+in+AIS+2_class

6Transaction+Processing+in+AIS+2_class - Transaction...

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Transaction Processing in AIS: Part 2 ACG3481
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Accounting Cycle After all the adjusting entries have been recorded and posted an adjusted trial balance is taken. This will not detect omissions or errors where debits = credits. Financial statements may then be prepared from the adjusted balances.
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DRESS RIGHT CLOTHING CORPORATION Adjusted Trial Balance July 31, 2009 Account Title Debits Credits Cash 68,500 $ Accounts receivable 2,000 Allowance for uncollectible accounts 500 $ Supplies 1,200 Prepaid rent 22,000 Inventory 38,000 Furniture and fixtures 12,000 200 Accounts payable 35,000 Note payable 40,000 Unearned rent revenue 750 Salaries payable 5,500 Interest payable 333 Common stock 60,000 Retained earnings 1,000 Sales revenue 38,500 Rent revenue 250 Cost of goods sold 22,000 Salaries expense 10,500 Supplies expense 800 Rent expense 2,000 Depreciation expense 200 Interest expense 333 Bad debt expense 500 Totals 181,033 $ 181,033 $ This is the Adjusted Trial Balance for Dress Right after all adjusting entries have been recorded and posted. Dress Right will use these balances to prepare the financial statements.
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Required Financial Accounting Statements Income Statement Revenue, Expenses, Gains and Losses Balance Sheet Assets, Liabilities and Owners’ Equity Statement of Stockholders’ Equity Statement of Cash Flows Cash flows from operations, investing & financing
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The income statement summarizes the results of operating activities of the company.
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Current assets: Cash 68,500 $ Accounts receivable 2,000 $ Less: Allowance for uncollectible accounts 500 1,500 Supplies 1,200 Inventory 38,000 Prepaid rent 22,000 Total current assets 131,200 Property and equipment: Furniture and fixtures 12,000 Less: Accumulated depreciation 200 11,800 Total assets 143,000 $ Dress Right Clothing Corporation Balance Sheet At July 31, 2009 Assets The balance sheet presents the financial position of the company on a particular date.
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Current liabilities: Accounts payable 35,000 $ Salaries payable 5,500 Unearned rent revenue 750 Interest payable 333 Note payable 10,000 Total current liabilities 51,583 Long-term liabilities: Note payable 30,000 Shareholders' equity: Common stock 60,000 $ Retained earnings 1,417 Total shareholders' equity 61,417 Total liabilities and shareholders' equity 143,000 $ Dress Right Clothing Corporation Balance Sheet At July 31, 2009 Liabilities and Shareholders' Equity Notice that assets of $143,000 equal total liabilities plus shareholders’ equity of $143,000.
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6Transaction+Processing+in+AIS+2_class - Transaction...

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