A. The initial investment is a significant cash outflow that is treated separately from all other cash flows
The ending owner’s capital balance after closing is $382,300.
The company had a net profit for the year of $91,300. This is calculated by subtracting expenses from net income. $205,000-$113,700 = $91,300.
In order to calculate the the ending owner’s capital for the year the accountant will add the net income to the starting owner’s equity, and then subtract the amount that the owner withdrew from the business.
Starting owner’s equity ($317,000 ) + net income ($91,300) = $408,300 and then subtract the amount withdrawn ($26,000) = $382,300, which is the ending owner’s equity balance.
Limited liability company is a distinct legal entity where members can held personally liable for the debts and liabilities for the company. Limited liability partnership combines characteristics of a partnership or corporation or sole proprietorship.
As in the given case, both sally and alice are uncomfortable with current tax situation as both are suffering with unlimited liability. it is better for them to opt limited liability partnership where in which persons are not held personally liable.
Answer:
first I will journalize the adjustments:
a. Received a $510 utility bill for electricity usage in July to be paid in August.
Dr Utilities expense 510
Cr Accounts payable 510
b. Owed wages to 15 employees who worked two days at $55 each per day at the end of July. The company will pay employees at the end of the first week of August.
Dr Wages expense 1,650
Cr Wages payable 1,650
c. On July 1, loaned money to an employee who agreed to repay the loan in one year along with $660 for one full year of interest. No interest has been recorded yet.
Dr Interest receivable 660
Cr Interest revenue 660
effects on the accounting equation:
Assets = Liabilities + Equity
a. 0 510 -510
b. 0 1,650 -1,650
<u>c. 660 0 660</u>
660 2,160 -1,500
Revenue - Expenses = Net income Cash flow
a. 0 510 -510 0 OA
b. 0 1,650 -1,650 0 OA
<u>c. 660 0 660 0 OA</u>
660 2,160 -1,500 0 NC
