December 1 On December 1, Ronnie Walsh forms a consulting business, named Mobility Solutions. Mobility Solutions receives $74,000 cash from Ronnie Walsh as an owner contribution. December 2 Mobility Solutions pays $4,700 cash for supplies. The company's policy is to record all prepaid expenses in asset accounts. December 3 Mobility Solutions pays $58,000 cash for equipment. December 4 Mobility Solutions purchases $10,450 of supplies on credit from a supplier, CalTech Supply. December 5 Mobility Solutions provides consulting services and immediately collects $6,400 cash. December 6 Mobility Solutions pays $3,200 cash for December rent. December 7 Mobility Solutions pays $1,700 cash for employee salary. December 8 Mobility Solutions provides consulting services of $4,900 and rents its test facilities for $3,600. The customer is billed $8,500 for these services. December 9 Mobility Solutions receives $8,500 cash from the client billed on December 8. December 10 Mobility Solutions pays CalTech Supply $3,100 cash as partial payment for its December 4 $10,450 purchase of supplies. December 11 Ronnie Walsh withdraws $1,600 cash from Mobility Solutions for personal use. December 12 Mobility Solutions receives $4,400 cash in advance of providing consulting services to a customer. The company's policy is to record fees collected in advance in a balance sheet account. December 13 Mobility Solutions pays $4,600 cash (insurance premium) for a 24-month insurance policy. Coverage begins on December 1. The company's policy is to record all prepaid expenses in a balance sheet account. December 14 Mobility Solutions pays $2,320 cash for supplies. December 15 Mobility Solutions pays $2,505 cash for December utilities expense. December 16 Mobility Solutions pays $1,800 cash in employee salary for work performed in the latter part of December.
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.
Preparea general ledger for each transaction and identify the financial statement impact of each entry.
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