Mr. Richard Blaine opens a new private detective business, which he calls "Richard Blaine, PI." Mr. Blaine has no partners. During the month of April, Richard Blaine, PI is involved in the transactions listed below. Richard Blaine, PI maintains its books using the accrual basis of accounting. Enter all of the foregoing entries in the General Journal. Do adjusting entries as of April 30. You do not need to put explanations for the entries. Blaine uses the straight line depreciation method. You can ignore income taxes. You do NOT need to do closing entries. April 1 April 1 April 1 April 1 April 5 April 10 April 22 Mr. Blaine invests $10,000 in Richard Blaine, PI Richard Blaine, PI pays $500 for two months of on-line advertising in "Casablanca Magazine." The first ad appears on-line on April 1. Richard Blaine, PI purchases a computer system for $5,000 in cash. The system has a useful life of 4 years and $200 salvage value. Richard Blaine, PI borrows $20,000 from Mr. Victor Laszlo and signs a promissory note to pay Laszlo back in four annual installments, with payments to be made every January 1. The annual interest rate on the note is 12% Richard Blaine, PI provides services to a husband, who asked that his business partner be investigated, receiving $2,500 in cash. Realizing he owes money to his bookmaker, Louis Renault, as a down payment on his outstanding gambling debt, Mr. Blaine takes $1,600 from Richard Blaine, PI to pay Renault On behalf of Richard Blaine, PI, Blaine agrees to a lecture series at the local community college. He is to provide 5 lectures and receives $5,000. The first lecture takes place on April 22 and the other lectures will take place in the future.
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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