Described below are certain transactions of XYZ Company: Feb 2 The Company purchased goods from ABC Corp for P150,000, 2/10, n/30. The Company records purchases and accounts payable at net amounts after cash discounts. The invoice was paid on February 25. Apr 1 The Company purchased a truck for P1,200,000 from Bye Motors Corp, paying P120,000 in cash and signing a one-year, 12% note for the balance of the purchase price. May 1 The Company borrowed P2,400,000 from Philippine Bank by signing a P2,760,000 noninterest-bearing note due one year from May 1. Aug 1 The Company’s board of directors declared a P900,000 cash dividend payable on September 10 to shareholders of record on August 31. Required: 1.Prepare all journal entries necessary to record the above transactions. 2.Prepare any adjusting entries concerning interest that are necessary to present fair financial statements, assuming that XYZ’s financial year ends on December 31 and that no adjusting entries relative to transactions above have been recorded.
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.
Described below are certain transactions of XYZ Company:
Feb 2 The Company purchased goods from ABC Corp for P150,000, 2/10, n/30. The Company
records purchases and accounts payable at net amounts after cash discounts. The
invoice was paid on February 25.
Apr 1 The Company purchased a truck for P1,200,000 from Bye Motors Corp, paying P120,000
in cash and signing a one-year, 12% note for the balance of the purchase price.
May 1 The Company borrowed P2,400,000 from Philippine Bank by signing a P2,760,000 noninterest-bearing note due one year from May 1.
Aug 1 The Company’s board of directors declared a P900,000 cash dividend payable on
September 10 to shareholders of record on August 31.
Required:
1.Prepare all
2.Prepare any
statements, assuming that XYZ’s financial year ends on December 31 and that no adjusting
entries relative to transactions above have been recorded.
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