Aa 4) Q X case 2 « | ne day in March 2013, John Sutherland, industrial mmissioner for the city of South Elk, received a telephone ll from Nick Faranda, president of Anderson Equipment d., who wanted to see him as soon as possible. When Sutherland arrived at Faranda's office, Faranda was tting at his desk going over his current year's cash budget. randa informed Sutherland that as a result of the revised edit restrictions adopted by his bank, he was being asked prepare an estimate of his financial requirements for the alance of the calendar year. All major customers of the ank were asked to provide this information. 313 Faranda also informed Sutherland that he was going to ave a meeting with Joanne Armstrong, the lending officer sponsible for handling the company's account, and that he anted to show her his financial requirements for the rest the calendar year. Consequently, Faranda asked therland to help prepare a budget forecast. On the basis of e information available, Faranda felt that it would not be ecessary to borrow funds before July 2013. The budget ould therefore be prepared for the period July 1, 2013, to nuary 31, 2014. The marketing department provided the following sales recast: ly ugust ptember ctober ovember ecember $ 50,000 100,000 500,000 650,000 550,000 400,000 nuary 200,000 Ten percent of sales are for cash, 40% of sales are llected after 30 days, and the remaining 50% after 60 days. urchases, which are 80% of sales, are incurred in the onth in which the sales are made. These goods are paid % in cash and 70% within 30 days. Distribution and Iministrative expenses are $10,000 per month, plus 1% of onthly sales. Start-up costs in July are $30,000. Income xes for the entire operating period are paid in April and re 40% of the profit. The monthly depreciation is $10,000. he company feels that it is necessary to maintain a inimum cash balance of $25,000 during the selling season. ne cash balance on July 1 is $75,000. westion repare a monthly cash budget from July 1, 2013 to January , 2014.
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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