2. The account balances in the ledger of Sari-Sari Store Inc. on December 31, 1996 were as follows: Debit Credit Php 3,600 30,000 156,300 200,000 500,000 Entry Cash Accounts Receivable Mdse. Inventory Land Building Accumulated Depreciation Accounts Payable Notes Payable 100,000 48,600 350,000
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.
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![2. The account balances in the ledger of Sari-Sari Store Inc. on December 31, 1996 were as follows:
Credit
Entry
Cash
Accounts Receivable
Mdse. Inventory
Land
Building
Accumulated Depreciation
Accounts Payable
Notes Payable
Capital Stock
Retained Earnings
Total
Debit
Php 3,600
30,000
156,300
200,000
500,000
Php 889,900
The following transactions occured during the year 1997:
1. Sales totaled Php 815,000, 40% of which was received in cash. The cost of merchandise sold amounted
to 50% of sales. However, sales returns amounted to Php 5,000. This was to be deducted from the
customer's account.
5. The following expenses were paid for in cash:
Sales Salaries
100,000
48,600
350,000
300,000
91,300
Php 889,900
2. Fire insurance for 1998 amounting to Php 10,000 was paid.
3. Inventory amounting to Php 500,000 was purchased on credit.
4. Sari-Sari Store Inc. secured a bank loan amounting to Php 100,000 at an interest of 12% per year.
Interest is to be paid every three months. The loan was signed on September 1, 1997.
Supplies
Utilities
Miscellaneous
Php 100,000
50,000
70,000
15,000
Total
Php 235,000
6. Wages representing salary of casual employees for the last two weeks of December 1997 amounted to
Php 25,000. This is to be paid only on January 15, 1998. The company was forced to hire additional workers
during the peak season.
7. The company declared on November 10, 1997 a cash dividend of Php 100,000 to its stockholders which
is to be paid on February 1, 1998.
8. Depreciation for the year was estimated at Php 10,000.
9. The company issued additional stocks amounting to Php 30,000 at par value but which were bought for
Php 50,000.
10. The company belongs to the 35% government tax bracket. Taxes on a firm's earnings for the accounting
period are paid during April of the following year.
Requirements:
Journalize all transactions.
Prepare the Balance Sheet and Income Statement for Sari-Sari Store Ince, as of the end of the
year 1997.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F18c48f75-db4f-470e-a220-102cceb01c6a%2F50f16d7f-857a-4aee-b61c-565b19691edd%2Ftrh3w4_processed.png&w=3840&q=75)
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