Owner's Equity Assets (heme Owned Liabilities (Amounts Owed Owner's Investmenti+ Eamingn) Lisa Vonisk, - Voznik, + Fevenus - Expenses Description Capital Lisa Accounts Receivable Prepaid Insurance Accounts Canh - Supplien Toole- Van Payable Drawing
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.
MASTERY PROBLEM
Lisa Vozniak started her own business, We Do Windows. She offers interior and exterior
window cleaning for local area residents. Lisa rents a garage to store her tools and
cleaning supplies and has a part-time assistant to answer the phone and handle thirdstory work. (Lisa is afraid of heights.) The transactions for the month of July are as
follows:
(a) Lisa invested cash by making a deposit in a bank account for the business, $8,000.
(b) Paid rent for July, $150.
(c) Purchased a used van for cash, $5,000.
(d) Purchased tools on account from Clean Tools, $600.
(e) Purchased cleaning supplies that cost $300. Paid $200 cash and will pay the balance next month, $100.
(f) Paid part-time assistant (wages) for first half of month, $100.
(g) Paid for advertising, $75.
(h) Paid two-year premium for liability insurance on van, $480.
(i) Received cash from clients for services performed, $800.
(j) Performed cleaning services for clients on account, $500.
(k) Paid phone bill, $40.
(l) Received cash from clients for window cleaning performed on account in transaction (j), $200.
(n) Made partial payment on tools purchased in transaction (d), $200.
(o) Earned additional revenues amounting to $800: $600 in cash and $200 on account.
(p) Vozniak withdrew cash at the end of the month for personal expenses, $100.
REQUIRED
1. Enter the above transactions in an
below.
2. After transaction (p), compute the balance of each account.
3. Prepare an income statement for We Do Windows for the month of July 20--.
4. Prepare a statement of owner’s equity for We Do Windows for the month of July 20--.
5. Prepare a
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