On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours. The following occurred during the first month of operations: Aug. 1 Purchased office furniture on account; $5,300. 1 Mark Diamond invested $7,100 cash into his new business. 2 Collected $4,050 in advance for a three-week guided caribou watching tour beginning later in August. 3 Paid $6,150 for six months’ rent for office space effective August 1. 4 Received $3,100 for a four-day northern lights viewing tour just completed. 7 Paid $1,550 for hotel expenses regarding the August 4 tour. 15 Mark withdrew cash of $600 for personal use. 22 Met with a Japanese tour guide to discuss a $155,000 tour contract. 31 Paid wages of $1,310. Assume Mark Diamond uses the straight-line method to depreciate the assets. Required: 1. Prepare General Journal entries to record the August transactions. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.) 2. Using the following information, prepare the adjusting entries on August 31. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.) The office furniture has an estimated life of four years and a $260 residual value. Use the straight-line method to depreciate the furniture. Two-thirds of the August 2 advance has been earned. One month of the Prepaid Rent has been used. The August telephone bill was not received as of August 31 but amounted to $330. 3. Post the entries to the accounts; calculate the ending balance in each account. 4. Prepare an adjusted trial balance.
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.
On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium...
On August 1, 2020, Mark Diamond began a tour company in the Northwest Territories called Millennium Arctic Tours. The following occurred during the first month of operations:
| Aug. | 1 | Purchased office furniture on account; $5,300. |
| 1 | Mark Diamond invested $7,100 cash into his new business. | |
| 2 | Collected $4,050 in advance for a three-week guided caribou watching tour beginning later in August. | |
| 3 | Paid $6,150 for six months’ rent for office space effective August 1. | |
| 4 | Received $3,100 for a four-day northern lights viewing tour just completed. | |
| 7 | Paid $1,550 for hotel expenses regarding the August 4 tour. | |
| 15 | Mark withdrew cash of $600 for personal use. | |
| 22 | Met with a Japanese tour guide to discuss a $155,000 tour contract. | |
| 31 | Paid wages of $1,310. |
Assume Mark Diamond uses the straight-line method to
Required:
1. Prepare General Journal entries to record the August transactions. (If no entry is required for a particular transaction/event, select "No
2. Using the following information, prepare the
- The office furniture has an estimated life of four years and a $260 residual value. Use the straight-line method to depreciate the furniture.
- Two-thirds of the August 2 advance has been earned.
- One month of the Prepaid Rent has been used.
- The August telephone bill was not received as of August 31 but amounted to $330.
3.
4. Prepare an adjusted
5-a. Prepare a income statement for month ended August 31, 2020.
5-b. Prepare a statement of changes in equity for month ended August 31, 2020.
5-c. Prepare a
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5-a. Prepare a income statement for month ended August 31, 2020.
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