Ken Hughes opened a web consulting business called Security First and recorded the following transactions in its first month of operations. Use the table and adjustment descriptions to record the adjustments in the general ledger. Apr. 1 Hughes invests $89,000 cash along with office equipment valued at $37,500 in the company. Apr. 2 The company prepaid $10,800 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 3 The company made credit purchases for $8,500 in office equipment and $4,100 in office supplies. Payment is due within 10 days. Apr. 6 The company completed services for a client and immediately received $6,100 cash. Apr. 9 The company completed a $17,500 project for a client, who must pay within 30 days. Apr. 13 The company paid $12,600 cash to settle the account payable created on April 3. Apr. 19 The company paid $3,120 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. Apr. 22 The company received $4,500 cash as partial payment for the work completed on April 9. Apr. 25 The company completed work for another client for $6,200 on credit. Apr. 28 Hughes withdrew $6,200 cash from the company for personal use. Apr. 29 The company purchased $2,900 of additional office supplies on credit. Apr. 30 The company paid $3,300 cash for this month’s utility bill. Descriptions of items that require adjusting entries on April 30, 2019, follow. a) On April 2, the company prepaid $10,800 cash for twelve months' rent for office space. b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1. c) Office supplies on hand as of April 30 total $1,700. d) Straight-line depreciation of office equipment, based on a 5-year life and a $7,000 salvage value, is $650 per month. e) The company has completed work for a client, but has not yet billed the $2,400 fee. f) Wages due to employees, but not yet paid, as of April 30 total $3,300. Use the table and adjustment descriptions to record the adjustments in the general ledger
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.
Ken Hughes opened a web consulting business called Security First and recorded the following transactions in its first month of operations.
Use the table and adjustment descriptions to record the adjustments in the general ledger.
| Apr. | 1 | Hughes invests $89,000 cash along with office equipment valued at $37,500 in the company. | ||
| Apr. | 2 | The company prepaid $10,800 cash for twelve months’ rent for office space. The company's policy is record prepaid expenses in |
||
| Apr. | 3 | The company made credit purchases for $8,500 in office equipment and $4,100 in office supplies. Payment is due within 10 days. | ||
| Apr. | 6 | The company completed services for a client and immediately received $6,100 cash. | ||
| Apr. | 9 | The company completed a $17,500 project for a client, who must pay within 30 days. | ||
| Apr. | 13 | The company paid $12,600 cash to settle the account payable created on April 3. | ||
| Apr. | 19 | The company paid $3,120 cash for the premium on a 12-month insurance policy. The company's policy is record prepaid expenses in balance sheet accounts. | ||
| Apr. | 22 | The company received $4,500 cash as partial payment for the work completed on April 9. | ||
| Apr. | 25 | The company completed work for another client for $6,200 on credit. | ||
| Apr. | 28 | Hughes withdrew $6,200 cash from the company for personal use. | ||
| Apr. | 29 | The company purchased $2,900 of additional office supplies on credit. | ||
| Apr. | 30 | The company paid $3,300 cash for this month’s utility bill. |
Descriptions of items that require
-
a) On April 2, the company prepaid $10,800 cash for twelve months' rent for office space.
-
b) The balance in Prepaid insurance represents the premium paid for a 12-month insurance policy the policy's coverage began on April 1.
-
c) Office supplies on hand as of April 30 total $1,700.
-
d) Straight-line
depreciation of office equipment, based on a 5-year life and a $7,000 salvage value, is $650 per month. -
e) The company has completed work for a client, but has not yet billed the $2,400 fee.
-
f) Wages due to employees, but not yet paid, as of April 30 total $3,300.
Use the table and adjustment descriptions to record the adjustments in the general ledger.
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
