Chris Nuts has a car repair business, Nuts and Bolts, that he started on 1 July 2020 after he lost his job during lockdown. The following are some of the transactions for the month of May 2021 Transaction Number Transactions example Paid rent of R2 450 for the month of May 2021. 1 Bought consumables during the month for R9 600 on credit. All consumables are purchased for immediate use. 2 Took a loan of R50 000 from his uncle Spanner Hardman. The loan bears interest at 9% per year payable monthly. The loan capital is payable in two equal annual instalments, the first of which is payable on 31 May 2022. 3 Chris purchased electronic diagnostic equipment that had a marked price of R40 000 with a 10% cash discount offered. Chris paid cash for the equipment which he put to use immediately. 4 Services fees for the month were as follows: - Cash deposited into the bank account R32 400. - On credit to businesses given 30 day accounts: R17 300. 5 Paid monthly interest on the loan taken from Spanner Hardman. Refer transaction 2 above. 6 Transferred payment to settle the creditor’s account – Refer transaction 1. A 5% settlement discount was received. Required: Prepare an accounting equation as the one illustrated below. Process the above transactions through the equation using + for increase in an element, use a - or use (brackets) for decreases and 0 for no effect. Chris does not have any overdraft facitlities Format: Trans Number Assets= R Equity+ R Liabilities R example (2450) Bank (2450) Rent 0
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.
Chris Nuts has a car repair business, Nuts and Bolts, that he started on 1 July 2020 after
he lost his job during lockdown. The following are some of the transactions for the month
of May 2021
| Transaction Number | Transactions |
| example | Paid rent of R2 450 for the month of May 2021. |
| 1 | Bought consumables during the month for R9 600 on credit. All consumables are purchased for immediate use. |
| 2 | Took a loan of R50 000 from his uncle Spanner Hardman. The loan bears interest at 9% per year payable monthly. The loan capital is payable in two equal annual instalments, the first of which is payable on 31 May 2022. |
| 3 | Chris purchased electronic diagnostic equipment that had a marked price of R40 000 with a 10% cash discount offered. Chris paid cash for the equipment which he put to use immediately. |
| 4 | Services fees for the month were as follows: - Cash deposited into the bank account R32 400. - On credit to businesses given 30 day accounts: R17 300. |
| 5 | Paid monthly interest on the loan taken from Spanner Hardman. Refer transaction 2 above. |
| 6 | Transferred payment to settle the creditor’s account – Refer transaction 1. A 5% settlement discount was received. |
Required:
Prepare an
transactions through the equation using + for increase in an element, use a - or use
(brackets) for decreases and 0 for no effect. Chris does not have any overdraft
facitlities
Format:
| Trans Number |
Assets= R |
Equity+ R |
Liabilities R |
| example | (2450) Bank | (2450) Rent | 0 |
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