Month April (Actual) May (Actual) une (Forecasted) uly (Forecasted) August (Forecasted) 390,000 September (Forecasted) 420,000 ● ● ● ● ● . Sales 410,000 400,000 380,000 360,000 Purchases 220,000 210,000 200,000 250,000 300,000 200,000 The company makes 10 percent of its sales for cash and 90 percent on credit. Of the credit sales: O 20% are collected in the month after the sale O 78% are collected two months after O 2% of sales are never collected and are written of as bad debts Variable Labour expense equals 10% of the current month's sales Fixed Labour expense is equal to $10,000 per month Overhead expenses of $8,000 per month should be expected Fixed debt payments of $40,000 are due in June and again in September Cash dividend of $20,000 is scheduled to be paid in June Tax installments of $35,000 are due in June and September There is a schedule capital outlay of $300,000 in September Depreciation is $20,000 per month Ending cash balance a in May is $20,000 Minimum desired balance at the end of any month is $50,000 Excess balances above $50,000 are invested in money market securities for 30 days and generate a return of 2.1% per annum. If the ending balance is below $15,000, money is borrowed from the company's line of credit at 12% per annum.
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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How the interest on investment comes for these three months ?
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