1 (c). Prepare an income statement for T.J. Chan as of March 31, 20- 1. T.J. Chan, an engineering consultant, decided to begin a business of his own. Chan has set up the following chart of accounts to be used in his business: 301 T.J. Chan, Capital 302 T.J. Chan, Drawings 101 Bank 110 A/R-M. Armota 111 A/R-F. Morsi 401 Fees Earned 120 Supplies 505 Bank Charges 125 Equipment 510 Car Expense 130 Automobile 515 Miscellaneous Expense 210 A/P-Eustace Bros. 520 Rent Expense 211 A/P Regal Oil 525 Telephone Expense 530 Wages Expense Transactions 1. On March 1, 20–, when he began his business, he invested in the business a bank balance of $8 000, an automobile worth $14 000, and equipment costing $6 000. 2. Paid $465 to Royalty Trust Co. in payment of the monthly rent. 3. Owner took $200 in cash for personal use. 4. Received a bill in the amount of $900 from Eustace Bros. for office supplies purchased on account. 5. Issued bill to F. Morsi for services performed, $500. 6. Paid cash of $400 to pay the office secretary's weekly wage. 7. Received a bill for $90 from Regal Oil for gasoline and oil used in the business automobile, due in 30 days. 8. $50 in cash had been deducted by the bank from the business's account to cover bank charges for the month. 9. Paid $150 in cash to the City Telephone Company in payment of the telephone bill that arrived today. 10. Issued bill to M. Amota for services performed, $800. 11. Purchased a magazine subscription for the office for $75, paid by cheque. 12. M. Armota made a partial payment of $300 to pay off the amount owed.
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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