Reliable Repair Shop - Adjustments The following information related to the operation of Reliable Repair Shop is gathered for adjustments as of June 30, 20-1 1. The shop tools costing P12,000, acquired on June 16, 20-1, or estimated to be useful for about two years, with no residual value. Depreciation for 1/2 month is taken up. 2. The shop equipment acquired on June 16 20-1 at the cost of P65,500 is estimated to be useful for about five years after which it is expected to be sold for P5,500. The precision 4 1/2 month is taken up. 3. Unbilled services, already rendered to customers from June 26 to 30, are not taking up in the records, P2,500 4. Cash collected from a customer, applicable to services that will be rendered in the month of July is P2,000 5. Rent revenue of 800 is already collected but not yet earned, covers July 1 to 15. 6. Expenses already paid for but not yet used up, as of June 30, are: a. Rent of P14,000 pertaining to the July 1 to August 15. b. Supplies on hand, based on a count, valued at P4,500. c. Taxes and licenses for the rest of the year, beginning July 1, 20-1, P1,800. 7. Expenses already incurred but not yet paid for as of June 30 are: a. Electricity, water, and telephone, P2,754. b. June 28 to 30 wages of the part-time shop assistant, P475. Interest on the P20,000, 2-year, 12% loan taken on June 19, 20-1. c. 8. Off the June 30 balance of accounts receivable, it is estimated that about 300 is doubtful of collection.
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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