Emerita Modesto established her own business called Modesto's Self-Storage. The account headings are presented below. Transactions completed during the month follow. Assets Cash + Accounts Receivable + Prepaid Insurance + Office Equipment Liabilities Accounts Payable Owner's Equity Modesto, Capital + Revenue - Expenses a. Deposited P120,000 in a bank account in the name of the business. b. Bought office equipment on account from PHINMA Corporation, P31,000. c. Paid rent for the month, P24,000: d. Bought supplies for cash, P4,500. e. Paid salaries, P9,800. f. Received cash for storage services, P36,000. g. Received and paid the utility bill, P2,520. h. Paid Errol Umerez Graphics for advertising, P4,280. (The bill was not previously recorded.) i. Paid for a one-year liability insurance policy, P8,350. j. Billed customers for storage services on account, P33,700. k. Received cash for storage services, P23,000. 1. Paid salaries, P9,900. m. Paid PHINMA Corporation P11,000 as part payment on the office equipment bought in transaction b. n. Modesto withdrew P12,000 for personal use. Required: 1. Record the transactions in columnar form, write plus and minus signs, and show the balance after each transaction to be sure the equation remains in balance. 2. Write the proof of totals at the bottom to show that one side of the equation equals the other side.
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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