Lopez & Company, located in the beautiful Puget Sound, provided the following post- closing trial balance for the year ended December 31, 2022 ACCOUNT Cash Accounts Receivable Allowance for doubtful accounts Inventory Equipment DEBIT CREDIT $ 72,000 110,000 $ 8,250 56,000 300,000 107,000 137,500 285,250 $ 538,000 538,000 Accumulated Depreciation - Equipment Accounts Payable Capital, Lopez TOTAL ADDITIONAL INFORMATION: The equipment shown on the trial balance consists of: Depreciation Method Date of Equipment Original Cost Useful Life Salvage Purchase A $100,000 01/01/2019 Straight line 10 years Zerc B $140,000 01/01/2019 Straight line 10 years $10,00 C $60,000 01/07/2020 Straight line 10 years Zerc Total $300,000 During the fiscal year 2023, the company had the following transactions related to its equipment: 1. March 1, 2023: Paid $45,000 to expand the production capacity of equipment C. This doubled the production capacity from 10,000 units per day to 20,000 units per day. The useful life of the equipment remains unchanged. 2. March 31, 2023: Paid $4,500 as regular maintenance for all three machines. The cost is divided equally among the 3 machines 3. August 31, 2023: Due to increased demand, purchased a fourth equipment (Equipment D). The invoice price was $100,000 with terms 2/10, n/60 FOB shipping point. The company paid $3,000 for shipping and another $4,000 to install the equipment. The invoice was paid within the discount period. The estimated useful life is 10 years with zero salvage value. REQUIRED (a) What is the total cost of the four equipment as at December 31, 2023 (b) What is the total depreciation expense for the four equipment for the year ended December 31, 2023 (c) What is the total accumulated depreciation for the four equipment as at December 31, 2023 (d) What is the net book value of the four equipment as at December 31, 2023 (e) Assume that equipment B was sold for $74,000 on January 1, 2024. Record the resulting journal entry. DEPRECIATION ACCUMULATED EQUIPMENT COST NET EXPENSE FOR 2023 DEPRECIATION A
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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