Following events and transactions occurred during the first month of operations of a business of Lance. May 1 Stockholders invested 22,500 cash in exchange for common stock. 2 Hired a secretary-receptionist at a salary of 1,700 per month. 3 Purchased 1,770 of supplies on account from Vincent Supply Company. 7 Paid office rent of 750 cash for the month. 11 12 Completed a tax assignment and billed client 3,500 for services performed. Received 3,770 advance on a management consulting engagement. Received cash of 1,020 for services performed for Orville Co. 17 31 Paid secretary-receptionist 1,700 salary for the month. 31 Paid 51% of balance due Vincent Supply Company. Lance uses the following chart of accounts: No. 101 Cash, No. 112 Accounts Receivable, No. 126 Supplies No. 201 Accounts Payable, No. 209 Unearned Service Revenue, No. 311 Common Stock, No. 400 Service Revenue, No. 726 Salaries and Wages Expense, and No. 729 Rent Expense. (a) Journalize transactions(b) Post to ledger accounts (c) Prepare 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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