(1) Set up trial balances of the general ledger and of the factory ledger as of January 1, 19B. (2) Open general ledger and factory ledger accounts from the January 1 trial balances and record the balances. (3) Post the January transactions directly into the ledger accounts without journal entries. Open new accounts whenever necessary. (4) Prepare trial balances of the general ledger and the factory ledger as of January 31, 19B.
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.
Factory Ledger Accounts,
|
Cash |
$20,000 |
Accounts Payable |
$15,500 |
|
|
25,000 |
Accrued Payroll |
2,250 |
|
Materials |
10,000 |
Capital Stock |
60,000 |
|
Work in Process |
4,500 |
|
21,250 |
|
Finished Goods |
9,500 |
Factory Ledger |
24,000 |
|
Machinery |
30,000 |
General Ledger |
24,000 |
Inventory accounts are kept in the factory ledger.
During the month of January, 19B,the following transactions were completed:
(a) Materials purchased, $92,000.
(b) Sundry factory
(c) Labor was consumed as follows : for direct production, $60,500; indirect labor, $12,500; sales salaries, $8,000; administrative salaries, $5,000. Credit Accrued Payroll for total gross wages. The employer's payroll tax cost is based on labor purchased. The state and federal
(d) Gross payrolls totaling $75,750 were paid (10% of wages paid was withheld for income taxes, and $4,545 for PICA taxes). Debit Accrued Payroll for total gross wages of $75,750. Credit Accounts Payable for employee earnings after deductions; then record the cash payment to employees.
(e) Materials were consumed as follows: direct materials, $82,500; indirect materials, $8,300.
(f) Factory overhead applied to production was 76% of the direct labor cost.
(g) Work finished and placed in stock cost $188,000.
(h) All but $12,000 of the finished goods were sold, terms 2/10, n/60. The markup was 30% above production cost.
(i) 80% of the accounts receivable was collected, less 2% discount.
(j) Various marketing and administrative expenses, 60% marketing, 40% administrative, incurred during the month amounted to $30,000, the credit being to Accounts Payable.
(k) The check register showed payments of accounts other than for payrolls in the amount of $104,000.
Required:
(1) Set up trial balances of the general ledger and of the factory ledger as of January 1, 19B.
(2) Open general ledger and factory ledger accounts from the January 1 trial balances and record the balances.
(3)
(4) Prepare trial balances of the general ledger and the factory ledger as of January 31, 19B.
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