GL0402- Based on Problem 4-1A LO C2, P2, P3 On April 1, Susan Allen created a new travel agency, Allen Travel. The following transactions occurred during the company’s first month. Apr. 1 Allen invested $34,000 cash and computer equipment worth $16,200 in the company. Apr. 2 The company rented furnished office space by paying $2,600 cash for the first month’s (April) rent. Apr. 3 The company purchased $1,400 of office supplies for cash. Apr. 10 The company paid $2,520 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. Apr. 14 The company paid $1,820 cash for two weeks’ salaries earned by employees. Apr. 24 The company collected $24,000 cash for commissions earned. Apr. 28 The company paid $1,820 cash for two weeks’ salaries earned by employees. Apr. 29 The company paid $500 cash for minor repairs to the company’s computer. Apr. 30 The company paid $450 cash for this month’s telephone bill. Apr. 30 Allen withdrew $1,900 cash from the company for personal use. Information for month-end adjustments follows: Prepaid insurance of $140 has expired this month. At the end of the month, $1,000 of office supplies are still available. This month’s depreciation on the computer equipment is $270. Employees earned $728 of unpaid and unrecorded salaries as of month-end. The company earned $1,810 of commissions that are not yet billed at month-end.
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.
GL0402- Based on Problem 4-1A LO C2, P2, P3
On April 1, Susan Allen created a new travel agency, Allen Travel. The following transactions occurred during the company’s first month.
| Apr. | 1 | Allen invested $34,000 cash and computer equipment worth $16,200 in the company. | ||
| Apr. | 2 | The company rented furnished office space by paying $2,600 cash for the first month’s (April) rent. | ||
| Apr. | 3 | The company purchased $1,400 of office supplies for cash. | ||
| Apr. | 10 | The company paid $2,520 cash for the premium on a 12-month insurance policy. Coverage begins on April 11. | ||
| Apr. | 14 | The company paid $1,820 cash for two weeks’ salaries earned by employees. | ||
| Apr. | 24 | The company collected $24,000 cash for commissions earned. | ||
| Apr. | 28 | The company paid $1,820 cash for two weeks’ salaries earned by employees. | ||
| Apr. | 29 | The company paid $500 cash for minor repairs to the company’s computer. | ||
| Apr. | 30 | The company paid $450 cash for this month’s telephone bill. | ||
| Apr. | 30 | Allen withdrew $1,900 cash from the company for personal use. |
Information for month-end adjustments follows:
- Prepaid insurance of $140 has expired this month.
- At the end of the month, $1,000 of office supplies are still available.
- This month’s
depreciation on the computer equipment is $270. - Employees earned $728 of unpaid and unrecorded salaries as of month-end.
- The company earned $1,810 of commissions that are not yet billed at month-end.
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