From the following trial balance, prepare adjusting entries and worksheet. Debit Credit (Rs) (Rs) Wages 2,000 Cash 6,650 Bank 1,500 Inventory 850 Sundry Debtors 2,700 Insurance 1,800 Patent rights ( 4 year unexpired) 2,000 Advertisement 1,200 Machinery 7,500 Sundry Creditors 2,500 Commission 2,200 Bad Debts 1,500 Loan 6,500 Common stock 10,000 Sales 15,000 Discount 1,200 Purchases 8,000 Salaries 1,000 Electric charges 500 Telephone Charges 700 Rent 1,000 Return outward 1,500 38,900 38,900 Adjustments: Prepaid insurance amounts to Rs.200 Unpaid advertisement expenses Rs.400 Machinery is to be depreciated @ 10 %. Unearned commission Rs.200 Accrued salaries Rs.200 Closing inventory is Rs.7,500
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.
: From the following
Debit Credit
(Rs) (Rs)
Wages 2,000
Cash 6,650
Bank 1,500
Inventory 850
Sundry Debtors 2,700
Insurance 1,800
Patent rights ( 4 year unexpired) 2,000
Advertisement 1,200
Machinery 7,500
Sundry Creditors 2,500
Commission 2,200
Loan 6,500
Common stock 10,000
Sales 15,000
Discount 1,200
Purchases 8,000
Salaries 1,000
Electric charges 500
Telephone Charges 700
Rent 1,000
Return outward 1,500
38,900 38,900
Adjustments:
- Prepaid insurance amounts to Rs.200
- Unpaid advertisement expenses Rs.400
- Machinery is to be
depreciated @ 10 %.
- Unearned commission Rs.200
- Accrued salaries Rs.200
- Closing inventory is Rs.7,500
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