Plane CC was registered on 1 August 2015. The founding statement of the Close Corporation (CC) sets out the following: The nature of the business - a spare parts retailer Names of the members and their interests and contributions made on 1 August 2015: Members' % Interest Contributions Barry Behr 50% R500 000 (cash and equipment) Doris Daniels 40% R400 000 (cash) Mo Mgotso 10% R100 000 (cash) The following balances, amongst others, appeared in the CC's books at the end of the current financial year, 31 July 2020: Members contributions R1 000 000 Retained Earnings (1 August 2019) R236 000 With regards to the financial year ending 31 July 2020, the following information was available: 1. On 31 July 2020, the CC recorded a profit of R940 000. This profit was after taking into account transactions with members like remuneration. 2. The income tax for the year is calculated at R260 000. 3. The members are entitled to a distribution of profit of R45 000 each, irrespective of how long they have been a member. Required: Open, post to and balance the Appropriation Account for the year ended 31 July 2020.
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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