rchandise) to various retail stores and uses the periodic inventory system. At the end of August, the company’s Post-Closing Trial Balance showed the following accounts and balances: Ram Wholesale Company Post-Closing Trial Balance August 31, 2016 Account Titles Debit Credit Cash $1
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.
| Ram Wholesale Company Post-Closing Trial Balance August 31, 2016 |
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| Account Titles | Debit | Credit | ||
| Cash | $156,300 | |||
| 15,700 | ||||
| Merchandise Inventory, 9/30/15 | 53,100 | |||
| Store Supplies | 4,100 | |||
| Office Supplies | 3,300 | |||
| Land | 34,000 | |||
| Delivery Truck | 92,000 | |||
| $800 | ||||
| Accounts Payable | 21,300 | |||
| Unearned Sales Revenue | 2,100 | |||
| Notes Payable (Due 2040) | 62,500 | |||
| Stephanie Ram, Capital | 271,800 | |||
| Totals | $358,500 | $358,500 |
Subsidiary Ledgers balances during the month of August
Customers with Outstanding Balances
| Dates | Customer Names | Credit Terms | Balances | |||
| 8/25 | Jose Mendes | 3/20, N/60 | $9,800 | |||
| 8/28 | Nicholas Jay | 2/15, N/45 | 5,900 | |||
| Totals | $15,700 |
Creditors with Outstanding Balances
| Dates | Creditors Names | Credit Terms | Balances | |||
| 8/22 | Lisa Supplies Company | 1/10, N/60 | $8,200 | |||
| 8/24 | Farge Company | 2/15, N/45 | 8,800 | |||
| 8/26 | Mason Retailers | 1/20, N/60 | 4,300 | |||
| Totals | $21,300 |
During the month of September, the following transactions were completed by the business:
| Sept. | 1 | Stephanie Ram, the proprietor of the business, invested $87,500 cash and Office Supplies valued at $1,800 into the business. | ||||||||||||||||
| 2 | Issued a check to establish a Petty Cash Fund for $5,000. | |||||||||||||||||
| 3 | Paid a premium of $3,700 for a one-year insurance policy, effective September 1st. | |||||||||||||||||
| 6 | Purchased 37 refrigerators on credit for $148,000 from Mason Retailers. The credit terms of the sale were 4/20, n/45, F.O.B. shipping point. | |||||||||||||||||
| 8 | Issued a check for $2,090 for the delivery charges on the September 6th transaction. | |||||||||||||||||
| 9 | The business returned two damaged refrigerators to Mason Retailers and received a credit of $9,000. | |||||||||||||||||
| 10 | Sold several refrigerators to various customers with the credit terms 3/10, n/60 and bills were sent out as follows:
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| 12 | Borrowed $61,600 from National Trust Bank by signing a Notes Payable. | |||||||||||||||||
| 13 | Dora Franklin returned a defective refrigerator to the business and received a credit of $4,600. | |||||||||||||||||
| 14 | Issued a check to pay the bi-weekly employee salaries, $17,100. | |||||||||||||||||
| 15 | Purchased Store Supplies on credit, terms 2/10, n/30, as follows:
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| 17 | Purchased a Delivery Truck for $62,000 in cash. | |||||||||||||||||
| 20 | Received payment (before any applicable discounts) from the following customers for the September 10th sale to be applied to their accounts as follows (Hint: You will need to calculate amount of net cash received from customers):
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| 21 | Received cash of $37,600 in advance for 8 refrigerators to be delivered over the next few months. | |||||||||||||||||
| 22 | Made a partial payment for the Store Supplies purchased on September 15th to be applied to the below accounts (before any applicable discounts) as follows (Hint: You will need to calculate amount of the net cash payment):
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| 23 | Stephanie Ram withdrew $4,200 in cash for her personal use. | |||||||||||||||||
| 24 | Sold several refrigerators and received $217,500 cash. | |||||||||||||||||
| 25 | Made a partial payment to Mason Retailers of $85,000 to be applied as a reduction to the account balance (before any applicable discounts) for the September 6th transaction (Hint: You will need to calculate amount of the net cash payment). | |||||||||||||||||
| 26 | Paid the monthly utility bills, $7,700. | |||||||||||||||||
| 27 | Stephanie Ram purchased a Forklift for $31,700. | |||||||||||||||||
| 28 | Issued a check to pay the bi-weekly employee salaries, $17,100. | |||||||||||||||||
| 29 | The Petty Cash Fund had a cash balance of $3,500 at the end of September with petty cash receipts/vouchers for postage, $430, and repair supplies, $920. A check was issued to replenish the fund. | |||||||||||||||||
| 30 | Issued a check for the payment of September’s rent, $14,500. |
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