On February 28, 2021, Cullumber Inc.’s general ledger showed Cash $15,000; Land $85,000; Buildings $81,000; Equipment $25,000; Accounts Payable $11,000; Mortgage Payable $123,000; Common Shares $41,000; and Retained Earnings $31,000. During the month of March, the following transactions occurred
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 February 28, 2021, Cullumber Inc.’s general ledger showed Cash $15,000; Land $85,000; Buildings $81,000; Equipment $25,000; Accounts Payable $11,000; Mortgage Payable $123,000; Common Shares $41,000; and
| Mar. | 1 | Received three movies to be shown during the first three weeks of March. The film rental was $27,000. Of that amount, $10,000 was paid in cash and the remainder was on account. (Hint: Cullumber uses the account Rent Expense to record film rentals). | |
| 2 | Hired M. Brewer to operate concession stand. Brewer agrees to pay Cullumber 15% of gross receipts, payable on the last day of each month, for the right to operate the concession stand. (Hint: Cullumber uses the account Concession Revenue to record concession receipts earned.) | ||
| 5 | Ordered three additional movies, to be shown the last 10 days of March. The film rental cost will be $300 per night. | ||
| 12 | Paid balance due on the movies rented on March 1. | ||
| 13 | Paid the accounts payable owing at the end of February. | ||
| 15 | Received $25,500 from customers for admissions for the first half of the month. (Hint: Cullumber uses the account Fees Earned to record revenue from admissions.) | ||
| 19 | Paid advertising expenses, $950. | ||
| 20 | Received the movies ordered on March 5 and paid rental fee of $3,000 ($300 × 10 nights). | ||
| 23 | Paid salaries of $4,200. | ||
| 26 | Paid $1,250 of the balance due on the mortgage, as well as $750 of interest on the mortgage. | ||
| 28 | Paid $3,000 for the monthly income tax instalment. | ||
| 30 | Received statement from M. Brewer, showing gross concession receipts of $16,600, and the balance due to Cullumber of $2,490 ($16,600 × 15%) for March. Brewer paid half of the balance due and will remit the remainder on April 5. | ||
| 31 | Received $25,800 from customers for admissions for the past two weeks. |
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