Adjusting Entries: a, Expired insurance for the period , $500. b, Supplies on hand at the end of the month, $1,000.
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.
Prepare an income statement for the month ended January 31,2018
General Entries:
Jan5 Received $60,000 from Shophia Lebron and issued 12,000 common shares of $5 par value.
Jan5 Paid $6,000 of general liability and property insurance. The disbursement by Check No. 100 was for a complete year of service.
Jan6 Rented an office and furniture for $2,000 per month. Issued Check No. 101 for $6,000, representing the first and last month's rent and the security deposit.[ the security deposit (debit deposit), the last month's rent, and the current rent are to be classified separately.]
Jan7 Issued Check No. 102 for $1,600 for the purchase of office supplies.
Jan7 Issued Check No. 103 for $7,000 for advertising to be run in local nespaper and magazines in the month of Jan
Jan10 Roxana Perini engaged My Place, House of Decor to renovate her oceanfront condominium. Received $10,000 from Roxana Perini after services were completed.
Jan12 Recorded $6,000 (net 30) decorating fees earned on account from Maribel Thompson to remodel her office.
Jan20 Received $8,000 from Frederick Lombart, a customer. These fees were ralated to services rendered to improved his office's lobby.
Jan25 Recored $12,000 ( net 60) decorating fees revenue earned on account from Roberto Andriani, a long-time customer who wanted to enhance his residence's decor.
Jan30 Issued Check No. 104 for $190 to pay the utilities bill for month.
Jan30 Issued Check No. 105 for $300 in payment of the telephone bill for month.
Jan30 Issued Check No. 106 for $200 for postage
Jan30 Issued Check No. 107 for $450 for business automobile expense.
Jan30 Issued Check No. 108 for $5,600 to Sophia LeBron for salary. (payroll taxes are not considered in this entry. Transactions in later months will show you how to journalize payroll tax deductions and expenses.)
a, Expired insurance for the period , $500.
b, Supplies on hand at the end of the month, $1,000.
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