Neko Case decides to open a cleaning and laundry service near the local college campus that will operate as a sole proprietorship. Neko Case incurred the following transactions during the month of June 2022. June 1 Neko Case invested $20,000 in cash to start a cleaning and laundry business on June 1. June 2 Purchased equipment for $5,000 paying $3,000 in cash and the remainder due in 30 days. June 5 Purchased supplies for $1,200 cash. June 10 Received a bill from College News for $300 for advertising in the campus newspaper. June 12 Cash receipts from customers for cleaning and laundry amounted to $2,400. June 20 Billed the Lion Soccer Team $450 for cleaning and laundry services. June 25 Paid $300 to College News for advertising that was previously billed in Transaction 4. June 28 Neko Case withdrew $1,500 from the business for living expenses. June 30 Incurred utility expenses for month on account, $500. June 30 Paid salaries of $600 to student workers. Requirements: 1) Make a tabular analysis of the transactions on accounting equation. Use the following column headings: Cash, Supplies, Accounts receivable, Equipment, Accounts Payable, Owner's capital, Withdrawal, Revenues, Expenses 2) Journalize the above transactions. 3) Prepare necessary T accounts 4) Prepare a trial balance on June 30, 2022. Other data: a) The office equipment has an estimated useful life of 50 months with zero salvage value b) The physical count revealed $200 supplies on hand at the end of the month. Requirements: 5) Prepare necessary adjusting entries on June 30, 2022 6) Enter the trial balance on a worksheet and complete the worksheet. 7) Prepare an income statement for the month ended June 30, 2022, an owner's equity statement on June 30, 2022 and a balance sheet on June 30, 2022. 8) Prepare necessary closing entries on June 30, 2022. 9) Prepare a post-closing trial balance on June 30, 2022
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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