ita Lopez started Biz Consulting, a new business, and completed the following transactions during its first year of operations. May. 1 Lopez invested $90,000 cash along with office equipment valued at $28,000 in the company. May. 2 The Company prepaid $8,000 cash for 12 months’ rent for office space. May. 3 Company made credit purchases for $7,000 in office equipment and $3,600 in office supplies. Payment is due within 10 days. May. 6 The Company completed services for a client and immediately received $4,000 cash. May. 9 Company completed a $5,000 project for a client, who must pay within 30 days. May. 10 The Company paid a local newspaper $550 cash for printing an announcement of the office’s opening. May. 11 The Company paid $1,840 cash for the office secretary’s wages for this period. May. 12 Paid the following cash expenses: salaries, $4,000; rent, $2,500; and interest, $440 May. 13 The company paid $10,600 cash to settle the account payable created on April 3. May. 19 The company paid $2,400 cash for the premium on a 12-month insurance policy. May. 22 The company received $5,400 cash as partial payment for the work completed on April 9. May. 25 The company completed work for another client for $2,890 on credit. May. 28 Lopez withdrew $5,500 cash from the company for personal use. May. 29 The company purchased $700 of additional office supplies on credit. May. 30 The company paid $639 cash for this month’s utility bill. Required: 1. Prepare general journal entries to record these transactions 2. Post the journal entries to the ledger accounts.
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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