4.5 On 31st March,2020, the following trial balance of Rama Rao was taken out. Prepare final accounts for the year after making the following adjustments : (a) Depreciation : 5% of plant and machinery and 10% of Fixtures and fittings. (b) Reserve for bad debts 5% on sundry debtors (c) Insurance unexpired on 31st March,2020 Rs. 170 (d) Outstanding wages Rs. 500 and salaries Rs. 300 Trial Balance Rs Dr Balances Plant & Machinery Fixtures and fittings Factory fuel & power Office salaries Rs. Carriage on purchases 897 55000 Discount 422 1720 Drawings account 6820 542 Stock as on 01.04.2019 21725 3745 Manufacturing expenses 2680 Lighting ( factory) Travelling expenses 392 Sales returns 7422 925 Insurance 570 Closing Stock Cr.Balances: Rent outstanding Rama Rao"s Capital Carriage on sales 960 16580 Cash at Bank 2245 Cash in hand 68 150 Sundry Debtors Purchases ( Adjusted) 47800 93230 66710 Sales 126177 22680 3172 Wages 9915 Sundry creditors Rent & Taxes 1915 Purchasae Returns Office Expenses 2778 Bills payable 6422
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.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 8 images
