Journalize the adjusting entries to be made at the end of the year. 1. Eight Drops Company is a consignee and receives a 5% commission from sales of a water purifying agent to customers. The firm is able to generate sales of P280,000 for the months of November and December for which no commission has yet been received. 2. Darren Company sub-leased a portion of its space to David Company for P4,500 per month. Davíd Company occupied the said space on October1 of the current year. Darren Company did not receive any payments from David Company since October 1. 3. Dominic Company has not recorded the professional services it has rendered to a client for P25,000 which remains uncollected at year -end. 4. Codie Company rented a bus to carry their guests to and from the airport beginning December 20 from Avis Car Rental at a daily rate of P2,000. No rental payment has yet been received by Avis Car Rental. 5. Hailey Company has a 90-day note received from a customer. Interest earned on the note but not yet received at the end of the year amounted to P1,500.
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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