Goodwin Bike’s began operations in April 2022 and had the following transactions. Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock. Paid $84,000 cash for 6 months’ rent. Purchased $300,000 of bicycle inventory on credit. Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000. Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000. Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months. Paid $24,000 in cash for supplies to have on hand for bike repairs. Collected $60,000 from accounts receivable. Paid for bikes purchased on credit in Transaction c Paid cash dividends of $3,000. Received $6,000 cash from a customer as a deposit for a custom bicycle to be built. Required: Record each transaction a) through k) in the financial statements’ effects template – A. At the end of April, the following information is available: At the end of April, $19,200 supplies remained on hand. Rent paid in Transaction b is for a lease that began on April 1. At the end of April, one-third of the advertising campaign in Transaction f was completed. The truck is expected to be used for five years (60 months). The custom bicycle in Transaction k was built and delivered to the customer on April 30. Required: Record any accounting adjustments required for items i. through v., in the financial statement effects template – B.
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.
Goodwin Bike’s began operations in April 2022 and had the following transactions.
- Owner invested $120,000 cash and a truck worth $36,000 in exchange for stock.
- Paid $84,000 cash for 6 months’ rent.
- Purchased $300,000 of bicycle inventory on credit.
- Sold bicycles for cash of $507,000. The cost of the bikes sold was $180,000.
- Sold and invoiced bicycles to a client for $95,400. The cost of the bikes sold was $48,000.
- Paid $90,000 cash for an advertising campaign in connection with Tour de France. The campaign will run over the next two of months.
- Paid $24,000 in cash for supplies to have on hand for bike repairs.
- Collected $60,000 from accounts receivable.
- Paid for bikes purchased on credit in Transaction c
- Paid cash dividends of $3,000.
- Received $6,000 cash from a customer as a deposit for a custom bicycle to be built.
Required: Record each transaction a) through k) in the financial statements’ effects template – A.
At the end of April, the following information is available:
- At the end of April, $19,200 supplies remained on hand.
- Rent paid in Transaction b is for a lease that began on April 1.
- At the end of April, one-third of the advertising campaign in Transaction f was completed.
- The truck is expected to be used for five years (60 months).
- The custom bicycle in Transaction k was built and delivered to the customer on April 30.
Required: Record any accounting adjustments required for items i. through v., in the financial statement effects template – B.
Problem #3A
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Problem 3B
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