86 SOLID FOOTING Problem 7-3 Purchasing Supplies and the Monthly Supplies Adjusting Entry On July 1, 2023, Martha Jones started Martha's Auto Repair Shop, Inc. On that same day, Martha purchased the following supplies for use in the repair shop: Item Shop Towels Degreasing Fluid Gasket Sealer Unit of Measure Rolls Quarts Tubes Quantity Purchased 120 75 40 Item Shop Towels Degreasing Fluid Gasket Sealer Chapter 7- Adjusting Entries Item Shop Towels Degreasing Fluid Gasket Sealer Price per Unit $4 On July 1, Martha paid cash for the supplies and set the accounting policy that all supplies would initially be recorded in the Supplies asset account. Quarts Tubes $9 $6 At the end of July, Martha counted the supplies that were left and prepared the following listing: Unit of Measure Quantity Remaining Rolls 80 Quarts 65 Tubes ▷ Cash ▷ Supplies ▷ Supplies Expense 32 At the end of August, Martha counted the supplies that were left and prepared the following listing: Unit of Measure Rolls Extended Total Cost Quantity Remaining 55 $480 $675 $240 Total $1,395 48 22 The following is a partial list of the accounts in Martha's General Ledger. These are the only accounts you need for this problem. Use the forms on Tabs 7-3 A and 7-3 B in the Excel workbook Chapter 07 c - Problem 7-1 to 7-8 Forms to complete this problem.
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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