Gawucho Furniture Manufacturing Company (Gawucho) commenced business on 1st January, 2019, preparing account to 31st December each year. The accountant of the business has provided you with the below information. Assets Note Original Cost (USD) Furniture 1 424,000 Plywood 2 130,000 Motor Vehicle 3 350,000 Plant and Machinery 4 100,000 Total Assets 1,004,000 Additional Information 1. The Furniture was produced on 1 st March, 2019 for sales but Gawucho used GH¢ 20,000 of these Furniture in its Administration offices. No sales was made during the year. 2. Plywood was purchased on 1st January, 2019 for the production of the furniture. 3. Motor Vehicle was acquired on 1st January, 2019 to convey furniture to customers’ destination only. 4. Plant and machinery was bought on 1st October, 2019 for production of furniture. 5. The business depreciates its asset at the rate of 20% on straight line method on one month ownership basis. 6. All the above assets existed as of 31st December, 2019. Required a. Draft an extract showing how the above transactions should be presented in the financial statements of Gawucho Furniture Manufacturing Company at the end of 2019 year. b. Provide notes to support your presentation
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.
Gawucho Furniture Manufacturing Company (Gawucho) commenced business on 1st January, 2019,
preparing account to 31st December each year. The accountant of the business has provided you with the
below information.
Assets Note Original Cost (USD)
Furniture 1 424,000
Plywood 2 130,000
Motor Vehicle 3 350,000
Plant and Machinery 4 100,000
Total Assets 1,004,000
Additional Information
1. The Furniture was produced on 1
st March, 2019 for sales but Gawucho used GH¢ 20,000 of these
Furniture in its Administration offices. No sales was made during the year.
2. Plywood was purchased on 1st January, 2019 for the production of the furniture.
3. Motor Vehicle was acquired on 1st January, 2019 to convey furniture to customers’ destination only.
4. Plant and machinery was bought on 1st October, 2019 for production of furniture.
5. The business
basis.
6. All the above assets existed as of 31st December, 2019.
Required
a. Draft an extract showing how the above transactions should be presented in the financial statements
of Gawucho Furniture Manufacturing Company at the end of 2019 year.
b. Provide notes to support your presentation
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