. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark (✔) in the posting reference column
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Fickle Realty acts as an agent in buying, selling, renting, and managing real estate.
The account balances at the end of July 2006 are as follows:
11 Cash 31,200
12
13 Prepaid Insurance 2,800
14 Office Supplies 1,000
16 Land 0
21 Accounts Payable 5,200
22 Unearned Rent 0
23 Notes Payable 0
31 Larissa Sanchez, Capital 39,700
32 Larissa Sanchez, Drawing 16,000
41 Fees Earned 224,000
51 Salary and Commission Expense 133,000
52 Rent Expense 17,500
53 Advertising Expense 14,300
54 Automobile Expense 6,400
59 Miscellaneous Expense 950
268,900 268,900
The following business transactions were completed by Fickle Realty during August
2006:
Aug. 1. Purchased office supplies on account, $1,760.
2. Paid rent on office for month, $2,500.
3. Received cash from clients on account, $38,720.
5. Paid annual insurance premiums, $3,600.
9. Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, $240.
17. Paid advertising expense, $3,450.
23. Paid creditors on account, $2,670.
29. Paid miscellaneous expenses, $350.
30. Paid automobile expense (including rental charges for an automobile), $1,360.
31. Discovered an error in computing a commission; received cash from the
salesperson for the overpayment, $800.
31. Paid salaries and commissions for the month, $17,400.
31. Recorded revenue earned and billed to clients during the month, $41,900.
31. Purchased land for a future building site for $75,000, paying $10,000 in
cash and giving a note payable for the remainder.
31. Withdrew cash for personal use, $2,500.
31. Rented land purchased on August 31 to local university for use as a parking
lot during football season (September, October, and November), received
advance payment of $1,500.
Instructions
1. Record the August 1 balance of each account in the appropriate balance column
of a four-column account, write Balance in the item section, and place a check
mark (✔) in the posting reference column
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