Mary Alexander is a sole trader who operates a small wholesale business in Kingston, Jamaica. On December 31, 2019 the following Trial Balance was extracted from her accounting records: Details DR CR Capital 350,000 Land & Building 230,500 Fixtures & Fittings 55,000 Machinery & Equipment 36,000 Debtors 28,000 Carriage Inwards 6,000 Returns 8,000 12,000 Carriage Outwards 3,500 Creditors 21,000 Purchases & Sales 82,345 260,000 Commission Received 5,500 Motor Vehicle 30,400 Rent Revenue 4,200 Wages & salaries 22,400 Telephone charges 2,500 Stock at Jan 1. 1991 10,000 Cash 12,400 Bank 125,655 652,700 652,700 Notes: i. Closing stock was $8,000. ii. Depreciation is to be charged on cost as follows: Fixtures and Fittings 20%, Machinery and Equipment 15%, and Motor Vehicle 15%.. iii. Provision for bad and doubtful debt is to be created equalling 5% of Debtors. iv. On December 31, 2019, $7,000 was outstanding for Salaries.
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.
Mary Alexander is a sole trader who operates a small wholesale business in Kingston, Jamaica. On December 31, 2019 the following
|
Details |
DR |
CR |
|
Capital |
350,000 |
|
|
Land & Building |
230,500 |
|
|
Fixtures & Fittings |
55,000 |
|
|
Machinery & Equipment |
36,000 |
|
|
Debtors |
28,000 |
|
|
Carriage Inwards |
6,000 |
|
|
Returns |
8,000 |
12,000 |
|
Carriage Outwards |
3,500 |
|
|
Creditors |
21,000 |
|
|
Purchases & Sales |
82,345 |
260,000 |
|
Commission Received |
5,500 |
|
|
Motor Vehicle |
30,400 |
|
|
Rent Revenue |
4,200 |
|
|
Wages & salaries |
22,400 |
|
|
Telephone charges |
2,500 |
|
|
Stock at Jan 1. 1991 |
10,000 |
|
|
Cash |
12,400 |
|
|
Bank |
125,655 |
|
|
652,700 |
652,700 |
Notes:
i. Closing stock was $8,000.
ii.
iii. Provision for bad and doubtful debt is to be created equalling 5% of Debtors.
iv. On December 31, 2019, $7,000 was outstanding for Salaries.
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