ane Hardware Store completed the following merchandising transactions in the month of May. At the beginning of May, the ledger of Crane showed Cash of $5,500 and Owner's Capital of $5,500. May 1 Purchased merchandise on account from Braun's Wholesale Supply for $4,200, terms 2/10, n/30. Sold merchandise on account $1,600, terms 1/10, n/30. The cost of the merchandise sold was $1,200. Received credit from Braun's Wholesale Supply for merchandise returned $400. Received collections in full, less discounts, from customers billed on May 2. Paid Braun's Wholesale Supply in full, less discount. Purchased supplies for cash $350. Purchased merchandise for cash $1,500. Received $150 refund for return of poor-quality merchandise from supplier on cash purchase. Purchased merchandise on account from Valley Distributors for $1,400, terms 2/10, n/30,FOB shipping point. 2 5 9 10 11 12 15 17 19 24 25 27 29 31 Paid freight on May 17 purchase $170. Sold merchandise for cash $2,900. The merchandise sold had a cost of $1,800. Purchased merchandise on account from Lumley, Inc. for $600, terms 2/10, n/30. Paid Valley Distributors in full, less discount. Made refunds to cash customers for returned merchandise $70. The returned merchandisecost $30. Sold merchandise on account for $1,500 terms n/30. The cost of the merchandise sold was $500. ane Hardware's chart of accounts includes the following: No. 101 Cash, No. 112 Accounts Receivable, No. 120 Inventory, No. 126 Supplies, No. 201 Accounts Payable, No. 301 Owner's Capital, No. 4015 venue, No. 412 Sales Returns and Allowances, No. 414 Sales Discounts, and No. 505 Cost of Goods Sold. Cash Date Explanation Date Balance Accounts Receivable Ref. ✓ J1 J1 J1 J1 J1 J1 J1 J1 J1 Explanation Ref. J1 J1 J1 Debit Debit Credit Credit No. 101 Balance No. 112 Balance
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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