Daniel Kelly, an attorney, opened his law practice on October 1. Using the horizontal worksheet below, record the following October transactions. Total the columns to show that assets equal liabilities plus stockholders’ equity as of October 31. 01. Kelly started his law practice by contributing $19,500 cash to the business on October 1, receiving shares of common stock in the company. 02. Purchased office equipment on account, $10,400. 03. Paid office rent for October, $700. 04. Paid $9,600 to access online legal database for two years. 05. Billed clients for services rendered, $11,300. 06. Made $6,000 payment on account for the equipment purchased on October 2. 07. Paid legal assistant’s salary, $2,800. 08. Collected $9,400 from clients previously billed for services. 09. Received invoice for October utilities, $180; it will be paid in November. 10. The company paid stockholders $1,500 as a cash dividend. Note: Use negative signs with answers, when appropriate.
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.
Daniel Kelly, an attorney, opened his law practice on October 1.
Using the horizontal worksheet below, record the following October transactions. Total the columns to show that assets equal liabilities plus
01. Kelly started his law practice by contributing $19,500 cash to the business on October 1, receiving shares of common stock in the company.
02. Purchased office equipment on account, $10,400.
03. Paid office rent for October, $700.
04. Paid $9,600 to access online legal database for two years.
05. Billed clients for services rendered, $11,300.
06. Made $6,000 payment on account for the equipment purchased on October 2.
07. Paid legal assistant’s salary, $2,800.
08. Collected $9,400 from clients previously billed for services.
09. Received invoice for October utilities, $180; it will be paid in November.
10. The company paid stockholders $1,500 as a cash dividend.
Note: Use negative signs with answers, when appropriate.
Horizontal model is the one in which the transactions of an entity are recorded in the form of accounting equation.
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