Innovative Designs, owned by Bartolome Pozon, has been operating for two years. Below is a series of transactions. For each transaction, indicate the accounts that should be debited and credited. If no journal entry is required, write "n/a" in the columns. Use the following account titles: Cash; Accounts Receivable; Supplies; Prepaid Expenses; Equipment; Patents; Accounts Payable; Notes Payable; Salaries Payable; Pozon, Capital; Pozon, Withdrawals; Service Revenues and Operating Expenses.
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.
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IMIƆ - EXercises I
Debits and Credits
Innovative Designs, owned by Bartolome Pozon, has been operating for two years.
Below is a series of transactions. For each transaction, indicate the accounts that should
be debited and credited. If no journal entry is required, write "n/a" in the columns. Use
the following account titles: Cash; Accounts Receivable; Supplies; Prepaid Expenses;
Equipment; Patents; Accounts Payable; Notes Payable; Salaries Payable; Pozon, Capital;
Pozon, Withdrawals; Service Revenues and Operating Expenses.
Transactions
Debit
Credit
Purchased equipment for use in the business; paid one-
third cash and gave a note payable for the balance.
b. Paid cash for salaries.
C. Collected cash for services performed this period.
Collected cash for services performed last period.
Performed services this period on credit.
f. Paid operating expenses incurred this period.
Paid cash for operating expenses incurred last period.
a.
d.
e.
B-
h. Incurred operating expenses this period to be paid next
period.
1. Purchased supplies for inventory to be used later; paid
cash.
j. Used some of the supplies from inventory for
operations.
k. Purchased a patent (an intangible): paid cash.
. Made a payment on the equipment note in (a); the
payment was part principal and part interest expense.
m. Collected cash on accounts receivable for services
previously performed.
Paid cash on accounts payable for expenses previously
incurred.
o. On the last day of current period, paid cash for an
insurance policy covering the next twelve months.
n.
9:30 AM
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