(b) The trial balance of Ahasan Ltd. at December 31, 2021, is as follows: Trial Balance As of December 31, 2021 Account Titles Merchandise Inventory, January 1 Purchase Purchase Returns & Allowances Purchase Discounts Sales Sales Returns & Allowances Sales Discounts Cash Office Supplies Accounts Receivable Notes Receivable Insurance Land Building Accumulated Depreciation- Building Office Equipment Accumulated Depreciation Office Equipment Accounts Payable Common Stock Transportation-in Sales Salaries Advertising Transportation-out Office Salaries Dividends Taxes Postage & Telephone Retained Earnings Debit Tk.225,000 755,000 70,000 17,500 31,000 4,000 40,000 100,000 10,500 170,000 410,000 106,500 41,000 138,000 30,500 39,000 111,500 50,000 75,000 25,000 Credit Tk. 12,000 20,000 1,260,000 80,000 26,500 95,000 806,000 150,000 TK. 2,449,500 Tk. 2,449,500 The following information is available at December 31: ▪ Merchandise inventory Tk.225,000. ▪ Office Supplies on hand Tk.1,000. ▪ Prepaid insurance Tk. 7,000. ▪ Depreciate building @15% per annum and Office equipment @ 17.5% per annum. ▪ Outstanding sales salaries Tk.2,500 and office salaries Tk.2,000. Required: (i) Prepare a classified income statement for year ended December 31, 2021. Of the insurance expense, postage & telephone expenses, and depreciation expenses on building, 75% is treated as selling expense and 25% is treated as administrative expenses. (ii) Prepare a classified balance sheet at December 31, 2021.
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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