Bata Ltd. has a head office and many retail branches which are supplied goods from the head office at 20% profit on sales price. Accounts are kept at head office from where all expenses (except petty expenses) are paid. Such petty expenses are paid by the branches which are allowed to maintain petty cash balances of $2,300 on Imprest system. From the following balances as shown by the books, prepare Branch Account. Balances on 1-4-2014 : Petty cash in hand at branch Stock in hand at branch at sales 2,300 Cash purchases by the branch (on permission from head office) 40,500 99,800 price Sundry debtors at branch Sundry creditors at branch Furniture and fixture at branch 50,000 Credit purchases 24,000 Payments made by the head office : 11,200 Rent for one year (paid on 1st July, 2014) 2,800 28,000 Salaries 1,300 Insurance paid for the year 12,000 Rent prepaid (upto 30th June, 2014) Transactions for the year ended 31-3-2015 were as follows : Goods sent to branch (Less : Returns) Cash sales at branch Credit sales at branch Allowances to debtors Cash received from customers Bad debts to be written off ending 30-6-2015 Payment made by the branch : Petty expenses 960 480 4,04,000 Balances on 31-3-2015 : 5,80,000 Stock at Sales Price 95,000 Creditors at the end 1,500 Write off 10% depreciation on furniture 80,000 1,200 37,500 23,000
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.
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