a. Enter these transactions in the cash book and ledgers. Balance the cash book and Duleep’s account. Bring down the balances on 1 December 20–7. b. Prepare a trial balance on 30 November 20–7. Mahendra is considering allowing credit customers a cash discount for prompt payment. c. Explain the effect that this suggestion may have on Mahendra’s cash flow. d. State how this discount would be recorded if Mahendra decided to proceed with this suggestion.
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.
Mahendra started a business on 1 November 20–7. He provided the following information for his first month of trading:
Nov 1 Introduced $160 000 capital into the business, of which $158 500 was transferred into a business bank account and the rest was placed in the business cash box
2 Purchased premises, $95 000, paying by credit transfer
5 Bought goods for resale, $2 600, on credit from Duleep
10 Returned goods, $150, to Duleep
14 Paid general expenses in cash, $275
19 Paid rates in cash, $395
21 Sold goods on credit to Anila, $124 Paid carriage on good sold, $95, in cash
24 Paid Duleep $1 000 by cheque on account
28 Took goods costing $250 for personal use
30 Rented out part of the premises and received $260 rent by cheque
a. Enter these transactions in the
b. Prepare a
Mahendra is considering allowing credit customers a cash discount for prompt payment.
c. Explain the effect that this suggestion may have on Mahendra’s
d. State how this discount would be recorded if Mahendra decided to proceed with this suggestion.
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