Angela Lopez owns and manages a consulting firm called Metrix, which began operations on March 1. On March 31, Metrix shows the following selected accounts and amounts for the month of March. Equipment. . . . . . . . . . . . . . $ 4,000 Salaries expense . . . . . . . . 3,000 Consulting revenue . . . . . . 12,000 Cash . . . . . . . . . . . . . . . . . . 8,000 Utilities expense. . . . . . . . . 200 Note payable . . . . . . . . . . . 2,400 Accounts receivable. . . . . . . . . $3,500 A. Lopez, Withdrawals. . . . . . . 2,000 Office supplies. . . . . . . . . . . . . 1,500 Rental revenue. . . . . . . . . . . . . 500 Advertising expense. . . . . . . . . 400 Prepaid insurance. . . . . . . . . . 1,000 Accounts payable. . . . . . . . $1,300 Note receivable . . . . . . . . . 2,500 Rent expense. . . . . . . . . . . 2,000 Unearned revenue. . . . . . . 300 Required 1. Prepare a March income statement for the business. 2. Prepare a March statement of owner’s equity. The owner’s capital account balance at March 1 was $0, and the owner invested $11,600 cash in the company on March 2. 3. Prepare a March 31 balance sheet. Hint: Use the owner’s capital account balance calculated in part 2.
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.
Angela Lopez owns and manages a consulting firm called Metrix, which began operations on March 1.
On March 31, Metrix shows the following selected accounts and amounts for the month of March. Equipment. . . . . . . . . . . . . . $ 4,000
Salaries expense . . . . . . . . 3,000
Consulting revenue . . . . . . 12,000
Cash . . . . . . . . . . . . . . . . . . 8,000
Utilities expense. . . . . . . . . 200
Note payable . . . . . . . . . . . 2,400
A. Lopez, Withdrawals. . . . . . . 2,000
Office supplies. . . . . . . . . . . . . 1,500
Rental revenue. . . . . . . . . . . . . 500
Advertising expense. . . . . . . . . 400
Prepaid insurance. . . . . . . . . . 1,000
Accounts payable. . . . . . . . $1,300
Note receivable . . . . . . . . . 2,500
Rent expense. . . . . . . . . . . 2,000
Unearned revenue. . . . . . . 300
Required
1. Prepare a March income statement for the business.
2. Prepare a March statement of owner’s equity. The owner’s capital account balance at March 1 was $0,
and the owner invested $11,600 cash in the company on March 2.
3. Prepare a March 31
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