A partial list of transactions from `r@ktas` Co. during 2020 follows. January 1- Tom and John each donated $ 20.000 in exchange for common stock to start the business. March 3- r@ktas co., paid $ 7.200 cash for two-year insurance policy that was effective immediately. March 15-The Company purchased $20.000 of supplies on account. April 5- The Company purchased equipment for $20.000 cash. The equipment should last for five years with no residual value. r@ktas company will take a full year of depreciation in 2020. May 1-r@ktas co., purchased a year’s worth of advertising in a local newspaper for $ 3.000 cash. November 1- The Company obtained a nine-month loan for $ 75.000 at 5% from Do Not Trust Bank, with interest and principal payable on June 2021. December 31- The Company paid $ 15.000 of accounts payable owed from transaction 3. December 31- Cash revenues totaled $20.000. Note The company had $3.000 of the supplies still on hand at the end of the year. Requirements: 1- Give the journal entries for the transactions: include any adjusting entries. 2- Post the journal entries to T accounts, prepare an adjusted trial balance at December 31, 2020. 3- Prepare the income statement, and the balance sheet at December 31, 2020. Then, prepare the closing
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.
A partial list of transactions from `r@ktas` Co. during 2020 follows.
January 1- Tom and John each donated $ 20.000 in exchange for common stock to start the business.
March 3- r@ktas co., paid $ 7.200 cash for two-year insurance policy that was effective immediately.
March 15-The Company purchased $20.000 of supplies on account.
April 5- The Company purchased equipment for $20.000 cash. The equipment should last for five years
with no residual value. r@ktas company will take a full year of
May 1-r@ktas co., purchased a year’s worth of advertising in a local newspaper for $ 3.000 cash.
November 1- The Company obtained a nine-month loan for $ 75.000 at 5% from Do Not Trust Bank, with
interest and principal payable on June 2021.
December 31- The Company paid $ 15.000 of accounts payable owed from transaction 3.
December 31- Cash revenues totaled $20.000.
Note
The company had $3.000 of the supplies still on hand at the end of the year.
Requirements:
1- Give the
2- Post the journal entries to T accounts, prepare an adjusted
3- Prepare the income statement, and the
entries
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