Instructions For the past several years, Steffy Lopez has operated a part-time consulting business from his home. As of July 1, 20Y2, Steffy decided to move to rented quarters and to operate the business, which was to be known as Diamond Consulting, on a full-time basis. Diamond entered into the following transactions during July: Jul. Jul. 1 The following assets were received from Steffy Lopez in exchange for common stock: cash, $13,500; accounts receivable, $20,800; supplies, $3,200; and office equipment, $7,500. There were no liabilities received. Paid two months' rent on a lease rental contract, $4,800. 1 2 4 5 6 Received cash from clients on account, $15,300. Paid cash for a newspaper advertisement, $400. Paid Office Station Co. for part of the debt incurred on July 5, $5,200. Recorded services provided on account for the period July 1-12. $13,300. 14 Paid receptionist for two weeks' salary, $1,750. 10 12 12 17 Recorded cash from cash clients for fees earned during the period July 1-17, $9,450. Paid cash for supplies, $600. 18 20 Paid the premiums on property and casualty insurance policies, $4,500. Received cash from clients as an advance payment for services to be provided, and recorded it as unearned fees, $5,500. Purchased additional office equipment on account from Office Station Co., $6,500. 24 26 27 Recorded services provided on account for the period July 13-20. $6,650. 31 Required: Recorded cash from cash clients for fees earned for the period July 17- 24, $4,000. 29 Paid telephone bill for July, $325. 31 Paid electricity bill for July, $675. 31 Recorded cash from cash clients for fees earned for the period July 25- 31, $5,200. Received cash from clients on account, $12,000. Paid receptionist for two weeks' salary, $1,750. 31 Recorded services provided on account for the remainder of July, $3,000. Paid dividends, $12,500. At the end of July, the following adjustment data were assembled. (a) Insurance expired during July is $375. (b) Supplies on hand on July 31 are $1,525. (c) Depreciation of office equipment for July is $750. (d) Accrued receptionist salary on July 31 is $175. (e) Rent expired during July is $2,400. (1) Unearned fees on July 31 are $2,750.
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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