Donegan's Lawn Care Service began operations in July, current year. The company uses the following general ledger accounts. Capital Stock Retained Earnings Mowing Revenue Salaries Expense Fuel Expense Cash Accounts Receivable Office Supplies Mowing Equipment Accounts Payable Notes Payable The company engaged in the following transactions during its first month of operations. July 18 Issued 500 shares of capital stock to Patrick Donegan for $1,500. July 22 Purchased office supplies on account for $100. July 23 Purchased mowing equipment for $2,000, paying $400 cash and issuing a 60-day note payable for the remaining July 24 Paid $25 cash for gasoline. All of this fuel will be used in July. July 25 Billed Lost Creek Cemetery $150 for mowing services. The entire amount is due July 30. July 26 Billed Golf View Condominiums $200 for mowing services. The entire amount is due August 1. July 30 Collected $150 from Lost Creek Cemetery for mowing services provided on July 25. July 31 Paid $80 salary to employee Teddy Grimm for work performed in July. Instructions a. Record each of these transactions in general journal form. Include a brief explanation of the transaction as part of each journal entry. b. Post each entry to the appropriate ledger accounts c. Prepare a trial balance dated July 31, current year. d. Explain why the Retained Earnings account has a zero balance in the trial balance.
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.
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