21. The following list of accounts and their balances appear on the books of MJ Thai Spa as of December 31, 2022: Cash Accounts Receivable Allowance for Bad Debts Notes Receivable Unexpired Insurance Furniture & Fixtures Accumulated Depn. - Furniture Equipment Accumulated Depn. - Equipment Accounts Payable Notes Payable Unearned Commissions g) Jay, Capital. Jay, Personal P/58,850 32,400 2,500 Mel, Capital Membership Fee Service Fee Income 19,000 Advertising Expense 2,575 Taxes and Licenses 238,000 5,950 432,000 21,600 Store Supplies Expense 15,000 Office Supplies Expense 50,000 Utilities Expense 600 Interest Expense 60,000 Interest Income 3,600 Loss on Foreign Exchange Rent Sales Salaries Office Salaries 40,000 945,900 1,530,500 300,160 108,970 644,000 346,000 150,000 Partnership agreement calls for the following: Monthly salary allowance of P5,000 for Mel and P7,500 for Jay, 12% interest on capital balances, and residual profit to be shared equally. 3,400 2,090 310,850 10,610 5,455 15,000 The following information are given to adjust the books: a) Provision for bad debts should be 10% of the outstanding accounts receivable. b) Office Furniture and Fixtures were acquired July 1, 2021 and the Delivery Equipment were acquired January 1, 2021. Depreciation rate is the same for both assets. c) One half of the unearned commission is already earned. d) e) Prepaid insurance on the delivery equipment is payable annually starting May 1. P10,000 of the notes receivable is interest bearing at 18% dated December 1, 2022 and due after 60 days. f) The note payable was issued to the bank and discounted at 18% for a year on December 1, 2022. The discount was charged to interest expense. Tax rate is 20%. Direction: Prepare a 10-column worksheet with a profit distribution table.
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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