On November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs. During the month, Kris completed the following transactions related to the business: Nov. 1 Kris transferred cash from a personal bank account to an account to be used for the business in exchange for common stock, $36,000. 1 Paid rent for period of November 1 to end of month, $4,000. 6 Purchased office equipment on account, $16,000. Purchased a truck for $43,000 paying S4,300 cash and giving a note payable for the remainder. 8 10 Purchased supplies for cash, $1,860. 12 Received cash for job completed, $8,000. 15 Paid annual premiums on property and casualty insurance, $2,400. 23 Recorded jobs completed on account and sent invoices to customers, $15,500. 24 Received an invoice for truck expenses, to be paid in November, $1,250. Enter the following transactions on Page 2 of the two-column journal: Nov. 29 Paid utilities expense, S3,660. 29 Paid miscellaneous expenses, S1,700. 30 Received cash from customers on account, S10,500. 30 Paid wages of employees, $4,750. 30 Paid creditor a portion of the amount owed for equipment purchased on November 6, $4,000. 30 Paid dividends, $1,600. 1) Prepare a Journal, Ledger, and Unadjusted Trial Balance. Answer questions: 2) Determine the excess of revenues over expenses for November. 3) Can you think of any reason why the amount determined in (4) might not be the net income for November? Because the dividends are declared but not paid Because the cash balance is incorrect. Because the closing inventory balance is missing. Because necessary adjustment to expenses, like depreciation has not been made.
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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