Brewster Corporation expects the following cash receipts and disbursements during the first quarter of the year (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1) January February March Cash receipts $330,000 $350,000 $320,000 Cash disbursements 310,000 390,000 330,000 The expected cash balance at January 1, is $122,000. Brewster wants to maintain a cash balance at the end of each month of at least $110,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31. Brewster Corporation Cash Budget for the Quarter Ended March 31 January Beginning cash balance $ 122,000 $ Cash receipts 330,000✔ 0✓ Short-term borrowings Cash available $ Cash disbursements $ Interest payment Total cash disbursements Ending cash balance $ 452,000 $ 310,000 $ 0✔ 310,000 ✓ 142,000 $ February 142,000 $ 350,000 ✓ 19,000 ✓ 511,000 $ 390,000 $ 190 ✓ 390,190 ✔ 120,810 x $ March 120,810 x 320,000 ✓ 10,000 ✓ 450,810 x 330,000 ✓ 100 ✓ 330,100✔ 120,710 x
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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