A Corporation reports operating expenses in two categories: (1) Cost of goods sold, (2) selling and (3) general and administrative. The adjusted trial balance included the following expense and loss accounts: Interest 7,000 Advertising 40,000 Freight-out 5,000 Insurance expense 6,000 Loss on sale of long-term investment 20,000 Officers’ salaries 125,000 Net purchases 50,000 Increase in the merchandise inventory 20,000 Rent for office space 180,000 Accounting and legal fees 130,000 Office supplies 15,000 Sales salaries and commissions 150,000 One-third of the rented premises is occupied by the sales department. [Q5]: Determine the total amount of (15) cost of goods sold, (16) selling expenses, (17) general administrative expenses and (18) other expenses on December 31, 2021.
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.
selling and (3) general and administrative. The adjusted
expense and loss accounts:
Interest 7,000
Advertising 40,000
Freight-out 5,000
Insurance expense 6,000
Loss on sale of long-term investment 20,000
Officers’ salaries 125,000
Net purchases 50,000
Increase in the merchandise inventory 20,000
Rent for office space 180,000
Accounting and legal fees 130,000
Sales salaries and commissions 150,000
One-third of the rented premises is occupied by the sales department.
[Q5]: Determine the total amount of (15) cost of goods sold, (16) selling expenses, (17)
general administrative expenses and (18) other expenses on December 31, 2021.
Step by step
Solved in 2 steps with 1 images
