current year. Flounder uses a periodic inventory system. Sept. 1 Purchased merchandise on account from Hillary Company at a cost of $49,000, FOB destination, terms 1/15, n/30. 2 The correct company paid $2,000 of freight charges to Trucking Company on the September 1 merchandise purchase. 5 Returned for credit $2,240 of damaged goods purchased from Hillary Company on September 1. 15 Sold the remaining merchandise purchased from Hillary Company to Irvine Company for $116,900, terms 2/10, n/30, FOB destination. 16 The correct company paid $2,500 of freight charges on the September 15 sale of merchandise. 17 Issued Irvine Company a credit of $5,600 for returned goods. These goods had cost Flounder Company $3,000 and were returned to inventory. 25 Received the balance owing from Irvine Company for the September 15 sale.
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.
Presented below are selected transactions for Flounder Company during September and October of the current year. Flounder uses a periodic inventory system.
| Sept. 1 | Purchased merchandise on account from Hillary Company at a cost of $49,000, FOB destination, terms 1/15, n/30. | |
| 2 | The correct company paid $2,000 of freight charges to Trucking Company on the September 1 merchandise purchase. | |
| 5 | Returned for credit $2,240 of damaged goods purchased from Hillary Company on September 1. | |
| 15 | Sold the remaining merchandise purchased from Hillary Company to Irvine Company for $116,900, terms 2/10, n/30, FOB destination. | |
| 16 | The correct company paid $2,500 of freight charges on the September 15 sale of merchandise. | |
| 17 | Issued Irvine Company a credit of $5,600 for returned goods. These goods had cost Flounder Company $3,000 and were returned to inventory. | |
| 25 | Received the balance owing from Irvine Company for the September 15 sale. | |
| 30 | Paid Hillary Company the balance owing for the September 1 purchase. | |
| Oct. 1 | Purchased merchandise on account from Kimmel Company at a cost of $56,000, terms 2/10, n/30, FOB shipping point. | |
| 2 | The correct company paid freight costs of $1,100 on the October 1 purchase. | |
| 3 | Obtained a purchase allowance of $2,400 from Kimmel Company to compensate for some minor damage to goods purchased on October 1. | |
| 10 | Paid Kimmel Company the amount owing on the October 1 purchase. | |
| 11 | Sold all of the merchandise purchased from Kimmel Company to Kieso Company for $134,000, terms 2/10, n/30, FOB shipping point. | |
| 12 | The correct company paid $800 freight costs on the October 11 sale. | |
| 17 | Issued Kieso Company a sales allowance of $2,100 because some of the goods did not meet Kieso's exact specifications. | |
| 31 | Received a cheque from Kieso Company for the balance owing on the October 11 sale. |
Record the September and October transactions for Flounder Company in a
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