On November 2, 2006, Mark established an interior decorating business flourishing designs. During the remainder of the month, Mark completed the following transactions related to the business: Nov 2. Mark transferred cash form a personal bank account to an account to be used for the business in exchange for capital stock, $15000. Nov 5. Paid rent for period of November 5 to end of month, $1750. Nov 6. Purchased office equipment on account, $8500. Nov 8. Purchased a used truck for $18000, paying $5000 cash and giving a note payable for the remainder. Nov 10. Purchased supplies for cash, $1115. Nov 12. Received cash for job completed $7500. Nov 15. Paid annual premiums on property and casualty insurance $1400. Nov 23. Recorded jobs completed on account and sent invoices to customers, $3950. Nov 24. Received an invoice for truck expenses, to be paid in December, $600. Nov 29. Paid utilities expense, $750. Nov 29. Paid miscellaneous expense, $310. Nov 30. Received cash from customers on account, $2200. Nov 30. Paid wages of employees, $2700. Nov 30. Paid creditor a portion of the amount owed for equipment purchased on November 6, $2125. Nov 30. Paid dividends, $1,400. Instructions: Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be used. 11 Cash 18 Truck 41 Fees Earned 12 Accounts receivable 21 Notes payable 51 Wages expense 13 Supplies 22 Accounts payable 53 Rent expense 14 Prepaid insurance 31 Capital Stock 54 Utilities expense 16 Equipment 33 Dividends 55 Truck expense 55 Miscellaneous Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted. Prepare a trial balance for flourishing designs as of November 30, 2006.
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 November 2, 2006, Mark established an interior decorating business flourishing designs. During the remainder of the month, Mark completed the following transactions related to the business:
Nov 2. Mark transferred cash form a personal bank account to an account to be used for the business in exchange for capital stock, $15000.
Nov 5. Paid rent for period of November 5 to end of month, $1750.
Nov 6. Purchased office equipment on account, $8500.
Nov 8. Purchased a used truck for $18000, paying $5000 cash and giving a note payable for the remainder.
Nov 10. Purchased supplies for cash, $1115.
Nov 12. Received cash for job completed $7500.
Nov 15. Paid annual premiums on property and casualty insurance $1400.
Nov 23. Recorded jobs completed on account and sent invoices to customers, $3950.
Nov 24. Received an invoice for truck expenses, to be paid in December, $600.
Nov 29. Paid utilities expense, $750.
Nov 29. Paid miscellaneous expense, $310.
Nov 30. Received cash from customers on account, $2200.
Nov 30. Paid wages of employees, $2700.
Nov 30. Paid creditor a portion of the amount owed for equipment purchased on November 6, $2125.
Nov 30. Paid dividends, $1,400.
Instructions:
- Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) Explanations may be used.
11 Cash 18 Truck 41 Fees Earned
12
13 Supplies 22 Accounts payable 53 Rent expense
14 Prepaid insurance 31 Capital Stock 54 Utilities expense
16 Equipment 33 Dividends 55 Truck expense
55 Miscellaneous
- Post the journal to a ledger of four-column accounts, inserting appropriate posting references as each item is posted. Extend the balances to the appropriate balance columns after each transaction is posted.
- Prepare a
trial balance for flourishing designs as of November 30, 2006.
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