Analyzing Transactions Luis Madero, after working for several years with a large public accounting firm, decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Services. The following captions and amounts summarize Madero's balance sheet at July 31, 2013. The following events occurred during August 2013. Issued common stock to Ms. Garriz in exchange for $15,000 cash. Paid $850 for first month's rent on office space. Purchased supplies of $2,250 on credit. Borrowed $8,000 from the bank. Paid $1,080 on account for supplies purchased earlier on credit. Paid secretary's salary for August of $2,150. Performed accounting services for clients who paid cash upon completion of the service in the total amount of $4,700. Used $3,180 of the supplies on hand. Performed accounting services for clients on credit in the total amount of $1,920. Purchased $500 in supplies for cash. Collected $1,290 cash from clients for whom services were performed on credit. Paid $1,000 dividend to stockholders. Required: 1. Record the effects of the transactions listed above on the accounting equation. The totals at July 31, 2013 have already been entered. If an amount box does not require an entry, enter zero ("0") or leave it blank. Enter decreases in account values as negative numbers. Assets = Liabilities + Equity Cash + Acct. Rec. + Supplies = Acct. Pay. + Notes Pay. + Common Stock + Ret. Earn. 8,000 15,900 4,100 2,500 4,000 12,000 9,500
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.
Analyzing Transactions
Luis Madero, after working for several years with a large public accounting firm, decided to open his own accounting service. The business is operated as a corporation under the name Madero Accounting Services. The following captions and amounts summarize Madero's balance sheet at July 31, 2013.
The following events occurred during August 2013.
- Issued common stock to Ms. Garriz in exchange for $15,000 cash.
- Paid $850 for first month's rent on office space.
- Purchased supplies of $2,250 on credit.
- Borrowed $8,000 from the bank.
- Paid $1,080 on account for supplies purchased earlier on credit.
- Paid secretary's salary for August of $2,150.
- Performed accounting services for clients who paid cash upon completion of the service in the total amount of $4,700.
- Used $3,180 of the supplies on hand.
- Performed accounting services for clients on credit in the total amount of $1,920.
- Purchased $500 in supplies for cash.
- Collected $1,290 cash from clients for whom services were performed on credit.
- Paid $1,000 dividend to stockholders.
Required:
1. Record the effects of the transactions listed above on the
If an amount box does not require an entry, enter zero ("0") or leave it blank. Enter decreases in account values as negative numbers.
| Assets | = | Liabilities | + | Equity | |||||||||
| Cash | + | Acct. Rec. | + | Supplies | = | Acct. Pay. | + | Notes Pay. | + | Common Stock | + | Ret. Earn. | |
| 8,000 | 15,900 | 4,100 | 2,500 | 4,000 | 12,000 | 9,500 |
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