Getting ready for the upcoming holiday season is traditionally a busy time for greeting card companies, and it was no exception for Kate. The following transactions occurred during the month of October: Hired an assistant at an hourly rate of $10 per hour to help with some of the computer layouts and administrative chores. Supplements her business by teaching a class to aspiring card designers. She charges and receives a total of $450. Delivers greeting cards to several new customers. She bills them a total of $3,500. Pays a utility bill in the amount of $250 that she determines is the business portion of her utility bill. Receives an advance deposit of $500 for a new set of cards she is designing for a new customer. Pays her assistant $200 for the work done this month. Determines that the assistant has worked 10 additional hours this month that have not yet been paid. Ordered and receives additional supplies in the amount of $1,000. These were paid for during the month. Counts her remaining inventory of supplies at the end of the month and determines the balance to be $300. Don’t forget to consider the supplies inventory balance at September 30, from Chapter 2. (Hint: This expense will be a debit to Cost of Goods Sold.) Records the adjusting entries for depreciation and insurance expense for the month. Pays herself a salary of $1,000. Paid monthly rent of $1,200 in cash. Receives her next utility bill during December and determines $85 applies to October’s operations. Deciding she needs a little more cash, Kate pays herself a $100 dividend.
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.
OCTOBER 2019:
Getting ready for the upcoming holiday season is traditionally a busy time for greeting card companies, and it was no exception for Kate. The following transactions occurred during the month of October:
- Hired an assistant at an hourly rate of $10 per hour to help with some of the computer layouts and administrative chores.
- Supplements her business by teaching a class to aspiring card designers. She charges and receives a total of $450.
- Delivers greeting cards to several new customers. She bills them a total of $3,500.
- Pays a utility bill in the amount of $250 that she determines is the business portion of her utility bill.
- Receives an advance deposit of $500 for a new set of cards she is designing for a new customer.
- Pays her assistant $200 for the work done this month.
- Determines that the assistant has worked 10 additional hours this month that have not yet been paid.
- Ordered and receives additional supplies in the amount of $1,000. These were paid for during the month.
- Counts her remaining inventory of supplies at the end of the month and determines the balance to be $300. Don’t forget to consider the supplies inventory balance at September 30, from Chapter 2. (Hint: This expense will be a debit to Cost of Goods Sold.)
- Records the
adjusting entries fordepreciation and insurance expense for the month. - Pays herself a salary of $1,000.
- Paid monthly rent of $1,200 in cash.
- Receives her next utility bill during December and determines $85 applies to October’s operations.
- Deciding she needs a little more cash, Kate pays herself a $100 dividend.
- Prepare a
trial balance as of October 31, 2019. - Prepare an income statement and a statement of
stockholders’ equity for the two-month period ending October 31, 2019, and a balance sheet as of October 31, 2019.
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