Magadjust Tayo Store is completing the accounting process for the year just ended December 31, 200B. The transactions in 200B have been journalized and posted. The following data with respect to adjusting entries were available: Delivery equipment that cost P294,000 was being used by the store. The equipment was estimated to have a useful life of four years and a residual value of P6,000 at the end of four years. The equipment was acquired on June 1, 200B. The asset will be depreciated evenly over its useful life On July 1, 200B, a two year insurance premium amounting to P30,000 was paid in cash and debited in full to Prepaid Insurance. Coverage began on July 1, 200B Magadjust Tayo operates a repair shop to meet its own needs. Also, the shop does repairs for Isip Mabuti. At the end of December 31, 200B, Isip Mabuti did not pay for repairs completed amounting to P7,500. This amount has not been recorded as Repairs Shop Revenue. Collection is expected on January 200C Required: Prepare necessary adjusting entries as of December 31, 200B
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.
Magadjust Tayo Store is completing the accounting process for the year just ended December 31, 200B. The transactions in 200B have been journalized and posted. The following data with respect to
Delivery equipment that cost P294,000 was being used by the store. The equipment was estimated to have a useful life of four years and a residual value of P6,000 at the end of four years. The equipment was acquired on June 1, 200B. The asset will be
On July 1, 200B, a two year insurance premium amounting to P30,000 was paid in cash and debited in full to Prepaid Insurance. Coverage began on July 1, 200B
Magadjust Tayo operates a repair shop to meet its own needs. Also, the shop does repairs for Isip Mabuti. At the end of December 31, 200B, Isip Mabuti did not pay for repairs completed amounting to P7,500. This amount has not been recorded as Repairs Shop Revenue. Collection is expected on January 200C
Required: Prepare necessary adjusting entries as of December 31, 200B
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