Natalie opened Natalie Washing co. on July 1, 2022. During July, the following transactions were completed. July 1 Owner invests $12,000 cash to start the business. July 3 Purchased used truck for $8,000, paying $2,000 cash and signing a 1-year, 10% note for the remainder. July 5 Purchased clening supplies for $900 on account. July10 Paid $1800 cash on a 1-year insurnace policy effective July 1 July 12 Billed customers $3700 fore cleaning services performed. July 15 Paid $500 on amount owed on cleaning supplies. July 16 Received $2500 for serviced to be performed evenly from July 16 through September 15. July 22 Paid $2000 for employee salaries. July 29 Collected $1600 cash from customers billed on July 12. July 30 Paid $290 for maintenance of the truck during month. July 31 Owner withdrew $600 from the business for personal expenses. Requirements: 1) Make a tabular analysis of the transactions on accounting equation. Use the following column headings: cash, Supplies, accounts receivable, prepaid insurance, equipment, accounts payable, notes payable, unearned service revenue, capital, withdrawal, revenues, expenses. 2) Journalize the above transactions. 3) Prepare necessary T accounts. 4) Prepare a trial balance on July 31, 2022, and prove the arithmetic accuracy of the accounts. Journalize the following adjustments: a) Services performed but unbilled and uncollected on July 31, 2022 were $1700. b) The depreciation on equipment for the month was $180. c) One twelfth of the insurance expired. d) A count shows $320 of cleaning supplies on hand at the end of the month. e) Accrued but unpaid employee salaries were $400. f) Interest accrued on the notes payable. g) A part of unearned service has been performed on account of July 16 transaction. Requirements: 5) Prepare appropriate adjusting entries on July 31. 6) Enter the adjusting entries on the worksheet and complete the worksheet. 7) Prepare an income statement, owner's equity statement for July and a balance sheet on July 31. 8) Journalize and post-closing entries and complete the closing process. 9) Prepare a post-closing trial balance at July 31.
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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