Exercise 5-6 Recording merchandise transactions: purchase and sale discounts-perpetual LO3 Chad Funk is a hair stylist who opened a business selling hair products. He imports products from around the world and sells to salons in Canada. 26200 Oct 1 5 7 10 14 22 23 25 26 31 Purchased $1,400 of hair spray from Orbit Pro; terms 3/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $200. Sold shampoo costing $420 to Barber & Co. for a price of $600 with terms of 2/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $80. Returned $500 of inventory to Orbit Pro due to an error in the October 1 order. Paid Orbit Pro for the purchase on October 1. Barber & Co. returned $100 of inventory from the sale on October 5. The inventory had a cost of $70. Received the payment from Barber & Co. on the October 5 sale. Purchased $2,000 of hair conditioner from Keratin Hair; terms 2/10, n/30, FOB shipping point. The appropriate party paid the shipping cost of $300. Sold hair gel to Styling Room for an invoice price of $1,000, terms 2/10, n/30, FOB destination. The hair gel had a cost of $700. The appropriate party paid the shipping cost of $150. Paid for the purchase on October 23. Received the payment from Styling Room on the October 25 sale.
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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