On April 1, 2020, Nels Ferrer organized a business called Friendly Trucking. During April, company entered into following transactions; April 1: Nels Ferrer deposited additional $500,000 cash in bank account in the name of business. April 1; Purchased for $250,000 a transportation equipment to be use in the business. Nels paid 50% as down payment while the balance will be paid on May 15, 2020. April 1; Paid rental for the month of April, $5,000 April 4; Collected accounts from previous month, $13,200 April 5; Earned and collected trucking income from Ryan, $8,000 April 8; Earned trucking income from Jesper, $30,000 on account. Jesper will pay on May 8, 2020. April 10; paid salaries of drivers, $10,000 April 15: Rented the vehicle to Joshua for $35,000, Joshua paid $20,000 on that date and the balance on April 20. April 18: Paid electric bills for the month, $2,000 April 20: Collected from Joshua the balance of his April 15 account April 25: Purchased office supplies $2,3000 April 29: Earned and collected trucking income from Jay, $18,000
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.
On April 1, 2020, Nels Ferrer organized a business called Friendly Trucking. During April, company entered into following transactions;
April 1: Nels Ferrer deposited additional $500,000 cash in bank account in the name of business.
April 1; Purchased for $250,000 a transportation equipment to be use in the business. Nels paid 50% as down payment while the balance will be paid on May 15, 2020.
April 1; Paid rental for the month of April, $5,000
April 4; Collected accounts from previous month, $13,200
April 5; Earned and collected trucking income from Ryan, $8,000
April 8; Earned trucking income from Jesper, $30,000 on account. Jesper will pay on May 8, 2020.
April 10; paid salaries of drivers, $10,000
April 15: Rented the vehicle to Joshua for $35,000, Joshua paid $20,000 on that date and the balance on April 20.
April 18: Paid electric bills for the month, $2,000
April 20: Collected from Joshua the balance of his April 15 account
April 25: Purchased office supplies $2,3000
April 29: Earned and collected trucking income from Jay, $18,000
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