On January 1, 2023, Caroline Lampron and Jenni Meno formed a computer sales and service enterprise in Montreal by investing $102,600 cash. The new company, Sheffield Sales and Service, had the following transactions in January: 1. 2. 3. 4. 5. Paid $6,840 in advance for three months' rent of office, showroom, and repair space. Purchased 40 personal computers at a cost of $1,710 each, six graphics computers at a cost of $3,420 each, and 25 printers at a cost of $513 each, paying cash on delivery. Sales, repair, and office employees earned $14,364 in salaries during January, of which $3,420 was still payable at the end of January. Sold 30 personal computers for $2,907 each, four graphics computers for $5,130 each, and 15 printers for $855 each. Of the sales amounts, $85,500 was received in cash in January and $35,055 was sold on a deferred payment plan. Other operating expenses of $9,576 were incurred and paid for during January; $2,280 of incurred expenses were payable at January 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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