On April 1, Jiro Nozomi created a new travel agency, Adventure Travel. The following transactions occurred during the company's first month. April 2 Nozomi invested $36,000 cash and computer equipment worth $35,000 in the company in exchange for its common stock. April 3 The company rented furnished office space by paying $2,200 cash for the first month's (April) rent. April 4 The company purchased $1,800 of office supplies for cash. April 10 The company paid $2,888 cash for a 12-month insurance policy. Coverage begins on April 11. April 14 The company paid $1,400 cash for two weeks' salaries earned by employees. April 24 The company collected $12,500 cash for commissions revenue. April 28 The company paid $1,400 cash for two weeks' salaries earned by employees. April 29 The company paid $350 cash for minor repairs to computer equipment. April 30 The company paid $1,450 cash for this month's telephone bill. April 30 The company paid $1,580 cash in dividends. The company's chart of accounts follows: 101 Cash 106 Accounts Receivable 124 Office Supplies 128 Prepaid Insurance. 167 Computer Equipment 168 Accumulated Depreciation-Computer Equipment 209 Salaries Payable 307 Common Stock 318 Retained Earnings 319 Dividends 403 Commissions Revenue 612 Depreciation Expense-Computer Equipment 622 Salaries Expense 637 Insurance Expense 640 Rent Expense 650 Office Supplies Expense 684 Repairs Expense 688 Telephone Expense 901 Income Summary Use the following information to prepare adjusting entries: a. Prepaid insurance of $160 expired this month. b. At the end of the month, $500 of office supplies are still available. c. This month's depreciation on computer equipment is $500. d. Employees earned $580 of unpaid and unrecorded salaries as of month-end. e. The company earned $1,700 of commissions revenue that is not yet recorded at month-end.
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.
Journal Entries -
Journal Entries are used to record transactions entered into by the company. It is recorded in the form of debit and credit. Once recorded, all the transactions it posted to Ledger.
Ledgers -
Ledgers are the columnar form of journals into individual accounts. Once posted all the ledgers, the balance will be posted to Trial Balance
Trial balance -
Trial Balance is the summary of all the ledgers under one column. All the debit and credit side posts according to the ledger balance.
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