On November 1, 2025, Kingbird Inc. had the following account balances. The company uses the perpetual inventory method. Debit Credit Accounts Receivable 6,272 Accounts Payable 9,520 Supplies 2.408 Unearned Service Revenue 11.200 Equipment 70.000 Salaries and Wages Payable 4.760 Common Stock 56,000 Total $103.880 Retained Earnings 19.600 Total $103,880 During November, the following summary transactions were completed. Nov.8 Paid $9,940 for salaries due employees, of which $5,180 is for November and $4,760 is for October. 10. Received $5,320 cash from customers in payment of account. 11. Purchased merchandise on account from Dimas Discount Supply for $22,400, terms 2/10, n/30. 12. Sold merchandise on account for $15,400, terms 2/10, n/30. The cost of the merchandise sold was $11,200. 15. Received credit from Dimas Discount Supply for merchandise returned $850. 19. Received collections in full, less discounts, from customers billed on sales of $15,400 on November 12. 20. Paid Dimas Discount Supply in full, less discount. 22. Received $6,440 cash for services performed in November. 25. Purchased equipment on account $14,000. 27. Purchased supplies on account $4,760. 28. Paid creditors $8,400 of accounts payable due. 29. Paid November rent $1,050. 29. Paid salaries $3,640. 29. Performed services on account and billed customers $1,960 for those services. 29. Received $1,890 from customers for services to be performed in the future. Adjustment data: 1. Supplies on hand are valued at $4,480. 2. Accrued salaries payable are $1,400. 3. Depreciation for the month is $700. 4. $1,820 of services related to the unearned service revenue has not been performed by month-end.
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 November 1, 2025, Kingbird Inc. had the following account balances. The company uses the perpetual inventory method.
| Debit | Credit | |||||
|
|
6,272 |
Accounts Payable |
9,520 |
|||
|
Supplies |
2.408 |
Unearned Service Revenue |
11.200 |
|||
|
Equipment |
70.000 |
Salaries and Wages Payable |
4.760 |
|||
|
Common Stock |
56,000 |
|||||
| Total |
$103.880 |
|
19.600 |
|||
|
|
|
|
||||
|
|
Total |
$103,880 |
During November, the following summary transactions were completed.
Nov.8 Paid $9,940 for salaries due employees, of which $5,180 is for November and $4,760 is for October.
10. Received $5,320 cash from customers in payment of account.
11. Purchased merchandise on account from Dimas Discount Supply for $22,400, terms 2/10, n/30.
12. Sold merchandise on account for $15,400, terms 2/10, n/30. The cost of the merchandise sold was $11,200.
15. Received credit from Dimas Discount Supply for merchandise returned $850.
19. Received collections in full, less discounts, from customers billed on sales of $15,400 on November 12.
20. Paid Dimas Discount Supply in full, less discount.
22. Received $6,440 cash for services performed in November.
25. Purchased equipment on account $14,000.
27. Purchased supplies on account $4,760.
28. Paid creditors $8,400 of accounts payable due.
29. Paid November rent $1,050.
29. Paid salaries $3,640.
29. Performed services on account and billed customers $1,960 for those services.
29. Received $1,890 from customers for services to be performed in the future.
Adjustment data:
1. Supplies on hand are valued at $4,480.
2. Accrued salaries payable are $1,400.
3. Depreciation for the month is $700.
4. $1,820 of services related to the unearned service revenue has not been performed by month-end.
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