Mr. Lopez opened a mini grocery store with the business name Lopez Fiesta Mart. Operations began on January 1, 2021, and the following transactions were completed during the month: 01 Mr. Lopez withdrew PHP 150,000.00 from a personal savings account and used it to open a new account in the name of Lopez Fiesta Mart. 02 Bought grocery supplies on account PHP 10,700.00. 04 Acquired a service vehicle costing PHP 76,000.00. A payment of PHP 25,000.00 Cash was made and a note payable was given for the PHP 51,000.00 remainder payable for 6 equal monthly installments. 06 Purchased merchandise from Puregold PHP 49,500.00, terms 5/10, 3/20. 07 Paid PHP 1,600.00 delivery charge for January 04 transactions. 08 Paid for three months of advertising and recorded Prepaid Advertising in the amount of PHP 6,000.00 11 Sold merchandise on account PHP 42,000.00 with 40% mark-up from the inventory cost of PHP 30,000.00, term 2/10, n/30. 12 Paid PHP 1,200.00 freight for January 11 transactions. 14 Returned defective merchandise to Puregold amounting to PHP 4,500.00. 15 Paid salaries, PHP 5,600.00. 16 Signed a promissory note for PHP 30,000.00 loaned amount from Commonwealth Bank. 17 Received returned merchandise from customer PHP 3,500.00. 18 Paid PHP 5,700.00 of the amount owed from the transaction of January 02. 19 Purchase additional groceries from Talavera Supermarket amounting to PHP 44,000.00. 20 Collected full settlement of a customer from January 11 transactions. 24 Paid telephone expense, PHP 1,600.00. 25 Paid building rentals for the month, PHP 4,800.00 26 Settled accounts to Puregold. 27 PHP 41,750.00 cost of merchandise sold for PHP 58,450.00. 28 Withdrew PHP 20,000.00 from the business. 29 Paid miscellaneous expenses, PHP 3,430.00. 30 Paid the first installment of the note payable on Service Vehicle, PHP 8,500.00. 31 Paid Salaries PHP 5,100.00, net of the following deductions: SSS, PHP 380.00; Pag-IBIG, PHP 100.00; Philhealth, PHP 220.00. The remaining inventory at the end of the month is PHP 20,000.00. Journalize the transactions using the following accounts: Account Number Account Titles 110 Cash 120 Accounts Receivable 130 Supplies 140 Prepaid Advertising 150 Merchandise Inventory 160 Service Vehicle 210 Accounts Payable 220 SSS Payable 230 Pag-IBIG Payable 240 Philhealth Payable 250 Notes Payable 310 Lopez, Capital 320 Lopez, Drawings 410 Sales 420 Sales Returns and Allowances 430 Sales Discount 510 Purchases 520 Freight In 530 Purchase Returns and Allowances 540 Purchase Discount 610 Freight Out 620 Salaries Expense 630 Rent Expense 640 Telephone Expense 650 Miscellaneous Expense 700 Income Summary Post to the ledger Prepare the trial balance Prepare the financial statements Post and close the closing entries
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.
Mr. Lopez opened a mini grocery store with the business name Lopez Fiesta Mart. Operations began on January 1, 2021, and the following transactions were completed during the month:
| 01 | Mr. Lopez withdrew PHP 150,000.00 from a personal savings account and used it to open a new account in the name of Lopez Fiesta Mart. |
| 02 | Bought grocery supplies on account PHP 10,700.00. |
| 04 | Acquired a service vehicle costing PHP 76,000.00. A payment of PHP 25,000.00 Cash was made and a note payable was given for the PHP 51,000.00 remainder payable for 6 equal monthly installments. |
| 06 | Purchased merchandise from Puregold PHP 49,500.00, terms 5/10, 3/20. |
| 07 | Paid PHP 1,600.00 delivery charge for January 04 transactions. |
| 08 | Paid for three months of advertising and recorded Prepaid Advertising in the amount of PHP 6,000.00 |
| 11 | Sold merchandise on account PHP 42,000.00 with 40% mark-up from the inventory cost of PHP 30,000.00, term 2/10, n/30. |
| 12 | Paid PHP 1,200.00 freight for January 11 transactions. |
| 14 | Returned defective merchandise to Puregold amounting to PHP 4,500.00. |
| 15 | Paid salaries, PHP 5,600.00. |
| 16 | Signed a promissory note for PHP 30,000.00 loaned amount from Commonwealth Bank. |
| 17 | Received returned merchandise from customer PHP 3,500.00. |
| 18 | Paid PHP 5,700.00 of the amount owed from the transaction of January 02. |
| 19 | Purchase additional groceries from Talavera Supermarket amounting to PHP 44,000.00. |
| 20 | Collected full settlement of a customer from January 11 transactions. |
| 24 | Paid telephone expense, PHP 1,600.00. |
| 25 | Paid building rentals for the month, PHP 4,800.00 |
| 26 | Settled accounts to Puregold. |
| 27 | PHP 41,750.00 cost of merchandise sold for PHP 58,450.00. |
| 28 | Withdrew PHP 20,000.00 from the business. |
| 29 | Paid miscellaneous expenses, PHP 3,430.00. |
| 30 | Paid the first installment of the note payable on Service Vehicle, PHP 8,500.00. |
| 31 | Paid Salaries PHP 5,100.00, net of the following deductions: SSS, PHP 380.00; Pag-IBIG, PHP 100.00; Philhealth, PHP 220.00. |
The remaining inventory at the end of the month is PHP 20,000.00.
Journalize the transactions using the following accounts:
| Account Number | Account Titles |
| 110 | Cash |
| 120 | |
| 130 | Supplies |
| 140 | Prepaid Advertising |
| 150 | Merchandise Inventory |
| 160 | Service Vehicle |
| 210 | Accounts Payable |
| 220 | SSS Payable |
| 230 | Pag-IBIG Payable |
| 240 | Philhealth Payable |
| 250 | Notes Payable |
| 310 | Lopez, Capital |
| 320 | Lopez, Drawings |
| 410 | Sales |
| 420 | Sales Returns and Allowances |
| 430 | Sales Discount |
| 510 | Purchases |
| 520 | Freight In |
| 530 | Purchase Returns and Allowances |
| 540 | Purchase Discount |
| 610 | Freight Out |
| 620 | Salaries Expense |
| 630 | Rent Expense |
| 640 | Telephone Expense |
| 650 | Miscellaneous Expense |
| 700 | Income Summary |
Post to the ledger
Prepare the
Prepare the financial statements
Post and close the closing entries
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