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Accounting Cycle for a Merchandising Business - Part 2

What is the Accounting Cycle in a Merchandising Business?

Written by Jason Gordon

Updated at April 7th, 2022

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What is the Accounting Cycle in a Merchandising Business?


Back to: Accounting & Taxation

0:00:00.399,0:00:04.080

All right. Here we are with part two of


0:00:02.399,0:00:05.920

chapter four's example


0:00:04.080,0:00:07.120

and so in the part one we did all the


0:00:05.920,0:00:09.360

journal entries and see


0:00:07.120,0:00:11.280

t tables and in this video we're going


0:00:09.360,0:00:12.960

to do the adjusted trial balance and the


0:00:11.280,0:00:14.480

financial statements, so in order to


0:00:12.960,0:00:15.200

really understand where the numbers come


0:00:14.480,0:00:17.760

from


0:00:15.200,0:00:18.720

with this part of the the video series


0:00:17.760,0:00:20.480

for example


0:00:18.720,0:00:22.800

for this example you really need to see


0:00:20.480,0:00:26.000

the first part which is in video one


0:00:22.800,0:00:27.199

um the first part of the example. So


0:00:26.000,0:00:28.800

but hopefully you have all this


0:00:27.199,0:00:30.080

information here's your t tables nothing


0:00:28.800,0:00:32.000

has changed they haven't done anything


0:00:30.080,0:00:33.120

to them I just carried them over from


0:00:32.000,0:00:34.719

the last video.


0:00:33.120,0:00:36.559

So we're going to start off with the


0:00:34.719,0:00:38.160

adjusted trial balance first


0:00:36.559,0:00:39.760

and this is adjusted because we've


0:00:38.160,0:00:40.879

already done the adjustment we only had


0:00:39.760,0:00:42.800

one, so we didn't do an


0:00:40.879,0:00:44.320

uh an unadjusted trial balance because


0:00:42.800,0:00:46.079

there was only one


0:00:44.320,0:00:48.000

so we just kind of lumped them into this


0:00:46.079,0:00:49.520

one, but all I'm going to do is I'm going


0:00:48.000,0:00:51.440

to list all of my accounts


0:00:49.520,0:00:53.760

and their respective balance on their


0:00:51.440,0:00:55.280

their proper side their normal side


0:00:53.760,0:00:56.640

whether it be debit or credit so just to


0:00:55.280,0:01:00.160

kind of give you an idea cash I'm going


0:00:56.640,0:01:02.559

to start with cache 48 860.


0:01:00.160,0:01:04.000

I'm going to put ar you don't have to


0:01:02.559,0:01:05.519

because it's zero but I'm just going to


0:01:04.000,0:01:09.560

go ahead and put that there


0:01:05.519,0:01:12.000

I'm going to do inventory of 8890


0:01:09.560,0:01:14.560

same thing with land you don't have


0:01:12.000,0:01:17.759

to put land there just because it's zero


0:01:14.560,0:01:19.040

but uh you can if you would like uh and


0:01:17.759,0:01:21.439

then we also have


0:01:19.040,0:01:22.640

ap, ap has a balance of zero which would


0:01:21.439,0:01:23.920

normally go on the credit side you don't


0:01:22.640,0:01:25.280

have to put that one there,


0:01:23.920,0:01:26.640

and for the sake of time I'm just going


0:01:25.280,0:01:28.000

to go ahead and just put the rest of


0:01:26.640,0:01:29.200

them on here and you can kind of follow


0:01:28.000,0:01:30.799

along check your work hopefully you've


0:01:29.200,0:01:32.799

done this already.


0:01:30.799,0:01:33.840

And so once I've got it to this point


0:01:32.799,0:01:36.720

then I'm going to go


0:01:33.840,0:01:38.320

to uh the debit column and add up all


0:01:36.720,0:01:39.280

the debit column and when you do that


0:01:38.320,0:01:42.479

you should get a


0:01:39.280,0:01:43.759

sum of 77 500,


0:01:42.479,0:01:45.360

and then I'm going to do the same thing


0:01:43.759,0:01:46.560

for the credit column and hope that it's


0:01:45.360,0:01:50.000

going to be the same


0:01:46.560,0:01:51.439

number and it is, it is 77 500, so we know


0:01:50.000,0:01:52.880

that our trial balance is good we know


0:01:51.439,0:01:54.479

all of our debits and all of our credits


0:01:52.880,0:01:56.320

equal that's spot on with what we need


0:01:54.479,0:01:58.399

to do with the accounting cycle,


0:01:56.320,0:01:59.840

so that leads us to the next step in the


0:01:58.399,0:02:02.479

accounting cycle which is


0:01:59.840,0:02:03.360

the financial statements. And so we know


0:02:02.479,0:02:05.759

we start off


0:02:03.360,0:02:07.360

with the income statement and to this


0:02:05.759,0:02:08.959

we're going to put charlie company


0:02:07.360,0:02:10.879

for whatever you know whatever the year


0:02:08.959,0:02:13.360

is and we're going to be doing a


0:02:10.879,0:02:14.720

multi-step income statement for this one,


0:02:13.360,0:02:16.560

because we have all the pieces that


0:02:14.720,0:02:18.319

would make it favorable to use a


0:02:16.560,0:02:20.080

multi-step income statement we have cogs,


0:02:18.319,0:02:22.160

we have non-operating income


0:02:20.080,0:02:23.520

or not operating activities, and so forth


0:02:22.160,0:02:25.280

so let's let's do that.


0:02:23.520,0:02:27.040

We know in a multi-step income statement


0:02:25.280,0:02:29.120

we're going to start off with not just


0:02:27.040,0:02:30.879

revenues but operating revenues


0:02:29.120,0:02:32.400

so that's the first part and under that


0:02:30.879,0:02:33.440

we're going to start with our sales


0:02:32.400,0:02:36.080

revenue our normal


0:02:33.440,0:02:38.959

day-to-day revenue and so sales revenue


0:02:36.080,0:02:41.120

we have a total of thirty thousand,


0:02:38.959,0:02:42.560

and from that we're going to take away


0:02:41.120,0:02:44.959

the two pieces


0:02:42.560,0:02:46.239

that affected sales revenue directly


0:02:44.959,0:02:47.200

which are going to be returns and


0:02:46.239,0:02:48.879

discounts,


0:02:47.200,0:02:50.800

so let's start with the discounts. So


0:02:48.879,0:02:52.959

I'll say less sales discount


0:02:50.800,0:02:54.400

of we had a sales discount of 100 that


0:02:52.959,0:02:56.959

we gave,


0:02:54.400,0:02:58.080

we also had sales returns that we took


0:02:56.959,0:03:01.599

back from customers


0:02:58.080,0:03:02.720

that were 2 000 total, so those are those


0:03:01.599,0:03:04.239

two t tables


0:03:02.720,0:03:05.760

and if I add that up that's going to


0:03:04.239,0:03:08.959

give me a sum of


0:03:05.760,0:03:09.440

2100 and if I subtract that 2100 from


0:03:08.959,0:03:12.720

the


0:03:09.440,0:03:13.440

30 000 that's going to net my sales to


0:03:12.720,0:03:17.360

be


0:03:13.440,0:03:19.280

14 excuse me 27 900,


0:03:17.360,0:03:21.680

so that's my net sales that's what I


0:03:19.280,0:03:23.680

ended up ending the year in total


0:03:21.680,0:03:24.799

sales revenue after the discounts and


0:03:23.680,0:03:26.560

the returns.


0:03:24.799,0:03:28.319

All right. From that I want to take away


0:03:26.560,0:03:30.560

my cost of goods sold


0:03:28.319,0:03:32.159

remember this is more informat and more


0:03:30.560,0:03:33.280

informative I understand that that's an


0:03:32.159,0:03:34.480

expense but


0:03:33.280,0:03:35.920

this is more informative to our


0:03:34.480,0:03:36.480

investors to say hey this is what we


0:03:35.920,0:03:40.560

truly made


0:03:36.480,0:03:41.599

on our sales, so net sales minus my cogs


0:03:40.560,0:03:43.840

of 14100


0:03:41.599,0:03:45.120

that's going to give me a total


0:03:43.840,0:03:47.440

operating


0:03:45.120,0:03:48.640

revenue of thirteen thousand eight


0:03:47.440,0:03:50.159

hundred,


0:03:48.640,0:03:52.560

all right so that takes care of


0:03:50.159,0:03:55.040

operating revenues. Now let's go into


0:03:52.560,0:03:56.879

operating expenses.


0:03:55.040,0:03:58.840

We only have two operating expenses we


0:03:56.879,0:04:00.159

have delivery expense which is three


0:03:58.840,0:04:02.959

hundred


0:04:00.159,0:04:04.159

and we have selling an admin expense


0:04:02.959,0:04:06.560

which is going to be


0:04:04.159,0:04:07.280

3 000. We add that up that's going to


0:04:06.560,0:04:09.760

give us a


0:04:07.280,0:04:13.200

total operating excuse me it should say


0:04:09.760,0:04:16.079

total operating expense of 3300


0:04:13.200,0:04:16.639

and if I subtract my total operating


0:04:16.079,0:04:19.040

revenue


0:04:16.639,0:04:20.639

minus my total operating expense that's


0:04:19.040,0:04:23.919

going to give me a total operating


0:04:20.639,0:04:25.919

income of 10 500,


0:04:23.919,0:04:27.280

so from an investor standpoint I'm going


0:04:25.919,0:04:28.080

to look at this go okay that's something


0:04:27.280,0:04:30.320

I can expect


0:04:28.080,0:04:31.120

year over year or at least growth on


0:04:30.320,0:04:33.040

that hopefully


0:04:31.120,0:04:35.280

year over year but that's their business


0:04:33.040,0:04:36.960

this is their their main business model.


0:04:35.280,0:04:38.240

Now let's look at the non-operating


0:04:36.960,0:04:40.000

activities the things that are more or


0:04:38.240,0:04:41.280

less one-offs I can't expect them


0:04:40.000,0:04:43.520

they're going to happen year every year


0:04:41.280,0:04:46.240

I can't plan for.


0:04:43.520,0:04:48.000

So we have a few we have the first one


0:04:46.240,0:04:50.400

being gain on the sale of land,


0:04:48.000,0:04:51.759

remember land is not my business so this


0:04:50.400,0:04:52.720

is just kind of a one-off I just made


0:04:51.759,0:04:54.320

some money,


0:04:52.720,0:04:55.919

so I'm going to put that down here it's


0:04:54.320,0:04:58.560

going to be positive number because it


0:04:55.919,0:05:00.160

is a in revenue coming in is like a


0:04:58.560,0:05:02.160

revenue it's a gain,


0:05:00.160,0:05:03.600

I also have interest expense and


0:05:02.160,0:05:05.039

interest expense is considered a


0:05:03.600,0:05:07.360

non-operating activity


0:05:05.039,0:05:09.039

because once the note's gone it's gone,


0:05:07.360,0:05:12.400

so we have interest expense


0:05:09.039,0:05:14.000

of 250 again that's negative because


0:05:12.400,0:05:15.440

it's an expense,


0:05:14.000,0:05:17.440

and so then I'm going to total out my


0:05:15.440,0:05:18.880

non-operating activities. So I'm going to


0:05:17.440,0:05:22.320

take the the sum of


0:05:18.880,0:05:24.240

2500 plus negative


0:05:22.320,0:05:26.160

250 that's going to give me a total


0:05:24.240,0:05:30.720

non-operating income


0:05:26.160,0:05:32.880

of 2250.


0:05:30.720,0:05:34.560

And if I take my total non-operating


0:05:32.880,0:05:36.080

income and add it to my total


0:05:34.560,0:05:39.120

non-operating income


0:05:36.080,0:05:40.320

that's going to give me a net income of


0:05:39.120,0:05:43.440

12750,


0:05:40.320,0:05:45.199

so that's my net income


0:05:43.440,0:05:46.639

for charlie company for this year. Now


0:05:45.199,0:05:48.880

let's move to the next


0:05:46.639,0:05:50.800

financial statement which is going to be


0:05:48.880,0:05:52.479

our statement of retained earnings.


0:05:50.800,0:05:53.680

Our retained earnings to begin with


0:05:52.479,0:05:55.680

remember we start with our beginning


0:05:53.680,0:05:57.360

retained earnings is going to be zero


0:05:55.680,0:05:58.639

why is it zero it's not supposed to be


0:05:57.360,0:05:59.520

there in the bottom again I don't know


0:05:58.639,0:06:01.199

why that's there


0:05:59.520,0:06:02.960

uh retained earnings table should not be


0:06:01.199,0:06:06.000

there but


0:06:02.960,0:06:08.000

uh it is zero because this is the first


0:06:06.000,0:06:09.360

year of this business so everything


0:06:08.000,0:06:09.919

starts at zero we have no beginning


0:06:09.360,0:06:13.840

balances.


0:06:09.919,0:06:15.199

so zero plus uh our net income


0:06:13.840,0:06:16.880

which is going to we just found to be


0:06:15.199,0:06:18.160

twelve thousand seven fifty that's going


0:06:16.880,0:06:19.600

to give me an intermediate number of


0:06:18.160,0:06:22.000

twelve thousand seven fifty.


0:06:19.600,0:06:23.520

our dividends we had no dividends so


0:06:22.000,0:06:25.840

that's going to be zero. so that means


0:06:23.520,0:06:27.919

our ending retained earnings is going to


0:06:25.840,0:06:30.960

be exactly what our net income is


0:06:27.919,0:06:32.160

which is twelve thousand seven fifty. All


0:06:30.960,0:06:35.039

right. So now let's go


0:06:32.160,0:06:36.080

into our balance sheet nothing's


0:06:35.039,0:06:37.360

changing here


0:06:36.080,0:06:39.280

uh we're just going to list out our


0:06:37.360,0:06:44.240

assets liabilities and equity


0:06:39.280,0:06:48.479

assets we have cash of 48 860,


0:06:44.240,0:06:50.880

inventory we have 8890,


0:06:48.479,0:06:51.680

you can put again ar and land if you


0:06:50.880,0:06:53.039

want to


0:06:51.680,0:06:56.160

but there's zero I'm going to leave them


0:06:53.039,0:06:56.720

out on this one, so our total assets is


0:06:56.160,0:07:00.400

going to be


0:06:56.720,0:07:01.520

57 750. Now let's look at our


0:07:00.400,0:07:03.599

liabilities


0:07:01.520,0:07:05.120

I could put ap there but it's a zero


0:07:03.599,0:07:06.319

balance so I'm just going to only put


0:07:05.120,0:07:07.840

notes payable because that's the only


0:07:06.319,0:07:10.400

liability I have a balance in


0:07:07.840,0:07:11.039

so 10 000 which means my total liability


0:07:10.400,0:07:13.520

is going to be 10000,


0:07:11.039,0:07:15.199

and finally equity remember we're


0:07:13.520,0:07:16.560

only really focusing on two


0:07:15.199,0:07:18.560

it's going to be common stock and


0:07:16.560,0:07:20.880

retained earnings, our common stock is


0:07:18.560,0:07:22.800

going to be 35 000


0:07:20.880,0:07:24.479

and our retained earnings we just found


0:07:22.800,0:07:27.919

from our statement of retained earnings


0:07:24.479,0:07:29.199

that's going to be 12 750,


0:07:27.919,0:07:32.000

if I add that that's going to give me a


0:07:29.199,0:07:34.639

total equity of 47 750


0:07:32.000,0:07:35.680

and if I add that 47 750 to the 10 000


0:07:34.639,0:07:36.639

in liabilities


0:07:35.680,0:07:39.120

that's going to give me total


0:07:36.639,0:07:42.240

liabilities and equity of 57750


0:07:39.120,0:07:43.599

and that matches my total asset so I


0:07:42.240,0:07:45.440

know I'm on the right path, remember


0:07:43.599,0:07:46.479

assets it has to equal liability and


0:07:45.440,0:07:48.400

equity so


0:07:46.479,0:07:50.080

we know we're good there. All right. So


0:07:48.400,0:07:50.879

that's the balance sheet the last thing


0:07:50.080,0:07:53.440

that we're going to do


0:07:50.879,0:07:54.879

is our statement of cash flow, and


0:07:53.440,0:07:55.520

remember to do the statement of cash


0:07:54.879,0:07:57.280

flow


0:07:55.520,0:07:59.199

we're really only going to focus in on


0:07:57.280,0:08:01.199

the cash t table


0:07:59.199,0:08:02.319

that's the key to the statement of cash


0:08:01.199,0:08:05.120

flow,


0:08:02.319,0:08:06.000

so let's do that. First we need to go


0:08:05.120,0:08:09.759

through and write our


0:08:06.000,0:08:11.039

fa's, oas, and ias. So 1-1 the 35 000 that


0:08:09.759,0:08:12.879

was for common stock that's going to be


0:08:11.039,0:08:15.759

fa


0:08:12.879,0:08:18.240

210 that 10 000 that was for the sale


0:08:15.759,0:08:22.400

from customers when they paid cash


0:08:18.240,0:08:24.160

that was oa 514 and 6-1


0:08:22.400,0:08:26.160

those were both from customers when they


0:08:24.160,0:08:27.520

paid off their accounts receivable


0:08:26.160,0:08:30.240

so those again are both are going to be


0:08:27.520,0:08:34.560

oa so over there over there.


0:08:30.240,0:08:36.560

831 that was the 7 500 from us


0:08:34.560,0:08:37.919

selling the land that we got for we got


0:08:36.560,0:08:39.279

cash back in return so that's going to


0:08:37.919,0:08:40.479

be ia


0:08:39.279,0:08:42.479

investing dealing with long-term


0:08:40.479,0:08:46.080

productive assets and then the nine


0:08:42.479,0:08:47.360

one that 10 000 was from getting the


0:08:46.080,0:08:49.040

loan from the bank, so


0:08:47.360,0:08:51.360

remember investors and creditors deal


0:08:49.040,0:08:55.360

with fa so that's going to be fa.


0:08:51.360,0:08:56.959

On the credit side we have 10 000


0:08:55.360,0:08:58.720

that was for the purchase of inventory


0:08:56.959,0:09:01.920

the first purchase of inventory,


0:08:58.720,0:09:05.200

so that's going to be oa. The 250 was the


0:09:01.920,0:09:08.480

uh cost to get that inventory sent to us


0:09:05.200,0:09:11.200

so again that's going to be oa the 5000


0:09:08.480,0:09:12.880

at 12 15 excuse me 215 that is going to


0:09:11.200,0:09:15.920

be the purchase of the land,


0:09:12.880,0:09:17.200

so that is going to be an ia, then we


0:09:15.920,0:09:19.200

also had 12 740


0:09:17.200,0:09:21.760

that's what we paid for some more


0:09:19.200,0:09:25.040

inventory so that would be oa,


0:09:21.760,0:09:28.800

300 that was for


0:09:25.040,0:09:31.920

uh what was that one for that was for


0:09:28.800,0:09:32.880

oh the the delivery expense when we had


0:09:31.920,0:09:34.320

to sell,


0:09:32.880,0:09:36.160

all right, when we had to send the


0:09:34.320,0:09:37.760

inventory that we sold to our customers


0:09:36.160,0:09:41.440

remember is our responsibility


0:09:37.760,0:09:43.680

so that was uh oa, 3000 was for s


0:09:41.440,0:09:44.720

a expenses that again a normal expense


0:09:43.680,0:09:47.839

so that's oa,


0:09:44.720,0:09:50.160

and then finally 250 that is


0:09:47.839,0:09:51.040

for interest expense and that is going


0:09:50.160,0:09:52.959

to be oa


0:09:51.040,0:09:54.880

as well. All right. So now that we have


0:09:52.959,0:09:56.640

the fa's is always


0:09:54.880,0:09:58.240

we can go through and fill out our


0:09:56.640,0:09:59.519

statement of cash flow, so starting with


0:09:58.240,0:10:00.720

the first one remember we always want to


0:09:59.519,0:10:02.079

start with the best foot forward we want


0:10:00.720,0:10:03.120

to start with positive numbers


0:10:02.079,0:10:05.200

so we're going to start on the debit


0:10:03.120,0:10:08.399

side of the cash.


0:10:05.200,0:10:09.680

So fa that 35 000 we are going to put as


0:10:08.399,0:10:13.040

cash received from


0:10:09.680,0:10:16.160

common stock 35 000. All right.


0:10:13.040,0:10:19.920

The next three so 210 for 10


0:10:16.160,0:10:22.560

000. five 514 for 9 900


0:10:19.920,0:10:24.000

and 6 1 for 8 000, all of those came


0:10:22.560,0:10:26.480

from customers those were all payments


0:10:24.000,0:10:28.079

from customers for our inventory


0:10:26.480,0:10:30.160

so I'm just going to lump those together


0:10:28.079,0:10:30.839

and call it cash received from customers


0:10:30.160,0:10:34.640

of


0:10:30.839,0:10:35.920

27.9. All right. The next one which is 83


0:10:34.640,0:10:38.560

was ia


0:10:35.920,0:10:40.720

that was for the sale of land so I'll


0:10:38.560,0:10:44.720

say cash received from sale of land


0:10:40.720,0:10:47.920

for 7 500, and then finally fa


0:10:44.720,0:10:49.120

the 91f8 that was for the loan that we


0:10:47.920,0:10:51.200

got from the bank,


0:10:49.120,0:10:52.720

so I'm going to call it cash received


0:10:51.200,0:10:55.360

from notes payable


0:10:52.720,0:10:56.640

under fa for 10 000. All right. That


0:10:55.360,0:10:58.160

takes care of all of our debits now


0:10:56.640,0:11:00.880

let's look at our credits


0:10:58.160,0:11:02.000

uh the first one one two that ten


0:11:00.880,0:11:04.800

thousand was


0:11:02.000,0:11:05.920

for inventory but also so was the one


0:11:04.800,0:11:08.160

three


0:11:05.920,0:11:10.079

for 250 was dealing with inventory as


0:11:08.160,0:11:13.440

well as the 328


0:11:10.079,0:11:14.800

12 740 was for inventory, so all of those


0:11:13.440,0:11:15.920

together were for inventory so I'm just


0:11:14.800,0:11:16.959

going to lump those together


0:11:15.920,0:11:18.720

because they all deal with the same


0:11:16.959,0:11:20.320

thing and I'm going to call that cash


0:11:18.720,0:11:22.640

payment for inventory


0:11:20.320,0:11:24.240

and I'm going to set it negative because


0:11:22.640,0:11:28.000

again this is money coming out


0:11:24.240,0:11:30.399

so negative 22 990.


0:11:28.000,0:11:31.040

All right the next one would be two fifteen


0:11:30.399,0:11:33.600

that five


0:11:31.040,0:11:35.040

thousand uh that was for ia that was when


0:11:33.600,0:11:36.560

we originally purchased the land


0:11:35.040,0:11:37.360

remember we purchased the land for five


0:11:36.560,0:11:39.120

thousand,


0:11:37.360,0:11:40.720

so we're going to put that in as a cash


0:11:39.120,0:11:43.839

payment for the purchase of land


0:11:40.720,0:11:44.560

of negative five thousand. The next one


0:11:43.839,0:11:46.079

would be five


0:11:44.560,0:11:47.600

five that three hundred that was for the


0:11:46.079,0:11:50.000

delivery expense so


0:11:47.600,0:11:52.160

cash payment for delivery expense of


0:11:50.000,0:11:54.399

negative three hundred,


0:11:52.160,0:11:57.200

we have the seven fifteen entry for the


0:11:54.399,0:11:59.040

three thousand that was for s a expenses


0:11:57.200,0:12:00.639

so we will again call it cash payment


0:11:59.040,0:12:04.000

for s a expenses


0:12:00.639,0:12:07.120

of negative 3 000 again under oa,


0:12:04.000,0:12:10.320

and the last one was the 1231 oa


0:12:07.120,0:12:13.200

of 250 which was the interest expense


0:12:10.320,0:12:14.160

and so we will put that up under oa as


0:12:13.200,0:12:15.920

cash payment for


0:12:14.160,0:12:17.200

interest expense. Now I do want to point


0:12:15.920,0:12:18.160

out something because maybe it's it's


0:12:17.200,0:12:19.279

kind of.


0:12:18.160,0:12:20.480

Hopefully it's not but maybe it's


0:12:19.279,0:12:22.160

throwing you for loop because if you


0:12:20.480,0:12:23.360

remember when we did the multi-step


0:12:22.160,0:12:26.079

income statement


0:12:23.360,0:12:27.600

we put interest expense on that under


0:12:26.079,0:12:29.040

non-operating activity


0:12:27.600,0:12:30.560

but here we're putting it under


0:12:29.040,0:12:31.600

operating activity and that's just


0:12:30.560,0:12:34.560

something that


0:12:31.600,0:12:35.120

that's a rule in accounting but for the


0:12:34.560,0:12:36.880

purpose


0:12:35.120,0:12:39.120

of interest expense and interest


0:12:36.880,0:12:40.560

revenues those go up under non-operating


0:12:39.120,0:12:42.639

activities on this


0:12:40.560,0:12:44.000

income statement, however they go up


0:12:42.639,0:12:45.200

under operating activities for the


0:12:44.000,0:12:48.480

statement of cash flow so


0:12:45.200,0:12:49.839

just be mindful of that. All right. So now


0:12:48.480,0:12:50.320

that we got all of our activities


0:12:49.839,0:12:52.959

together


0:12:50.320,0:12:54.720

we can total those up the net cash flow


0:12:52.959,0:12:56.639

from operating activities is going to be


0:12:54.720,0:12:58.800

one thousand three sixty,


0:12:56.639,0:13:00.160

the net cash flow from ia or investing


0:12:58.800,0:13:01.200

activities is going to be two thousand


0:13:00.160,0:13:02.959

five hundred,


0:13:01.200,0:13:04.399

and the net cash flow from financing


0:13:02.959,0:13:04.720

activities that is going to be forty


0:13:04.399,0:13:07.200

five


0:13:04.720,0:13:08.480

thousand, if we add those three numbers


0:13:07.200,0:13:10.560

up that's going to give me a net


0:13:08.480,0:13:12.399

increase in cash of forty eight thousand


0:13:10.560,0:13:14.000

eight sixty,


0:13:12.399,0:13:15.680

if we add to it our beginning cash


0:13:14.000,0:13:17.120

balance which remember we're a brand new


0:13:15.680,0:13:17.600

business so we have zero in our


0:13:17.120,0:13:19.760

beginning


0:13:17.600,0:13:21.600

balances of everything, so if we add


0:13:19.760,0:13:23.360

forty eight thousand eight sixty to zero


0:13:21.600,0:13:25.360

we will get an ending cash balance of


0:13:23.360,0:13:26.639

forty eight thousand eight sixty which


0:13:25.360,0:13:29.120

also happens to be


0:13:26.639,0:13:30.480

again this is a check figure the ending


0:13:29.120,0:13:33.040

cash balance for our cash t


0:13:30.480,0:13:34.880

table, that's what we want. So that's how


0:13:33.040,0:13:37.120

we do the


0:13:34.880,0:13:38.800

trial balance as well as all of the


0:13:37.120,0:13:39.199

financial statements, and in the next


0:13:38.800,0:13:40.800

video


0:13:39.199,0:13:42.639

the last video for this chapter we will


0:13:40.800,0:13:44.480

be going over the closings


0:13:42.639,0:13:48.079

and the post-closing trial balance, so


0:13:44.480,0:13:48.079

y'all have a good one.

Related Topics

  • What is Merchandising? – Financial Accounting
  • Recognizing Inventory Sales – Financial Accounting
  • Perpetual vs Period Systems – Financial Accounting
  • Special Merchandising Transactions – Financial Accounting
  • Adjustments for Inventory – Financial Accounting
  • Multi-Step Income Statement – Financial Accounting
  • Accounting Cycle for Merchandising Business Example Part 1
  • Accounting Cycle for Merchandising Business Example Part 2
  • Accounting Cycle for Merchandising Business Example Part 3

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