QUESTION 1 The following is the Trial Balance of Sonia HR Enterprises, a dealer in HR Software, as at 31st December, 2021. GHS GHS Capital Receivables and Payables Inventory Motor vehicles: (cost) Accumulated depreciation (31 December 2020) Office equipment: (cost) Accumulated depreciation (31 December 2020) Administrative expenses Purchases and sales 240,000 159,000 51,000 99,000 72,500 32,500 90,000 30,000 26,000 243,750 490,500 Employee benefits Selling expenses Plant: (cost) 33,000 20,000 125,000 Accumulated depreciation (31 December 2020) 37,500 Discounts 7,500 12,500 Accruals 79,000 Investment income 27,500 Returns 12,000 17,500 Cash and cash equivalents 126,750 Allowance for doubtful debts 31 December 2020 14,000 Bad debts 17,500 1.032.000 1.032,000 Additional information available is given below: i. The inventory sheets as at 31/12/2021 put the value of inventory at GHS129,500. ii. Allowance for doubtful debt is to be increased to GHS19,080 as at 31 December 2021. iii. An amount of GHS6,000 in respect of rent and rates is included in administrative expenses. This amount relates to 2022 financial year. All items of property, plant and equipment are depreciated at the rate of 10% per annum on the straight line basis. An amount of GHS10,000 incurred in the repair of plant had been debited to the plant iv. v. account. vi. Personal withdrawal of cash amounting to GHS25,000 was made by Miss Sonia, the proprietress. This has not been recorded in the financial records. Required: Prepare in a suitable form for publication, a. Income statement for the year ended 31st December, 2021. b. Statement of financial Position as at 31st December, 2021
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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