Practice Quiz Retail Transactions ABC Co. began operations on January 1. Please prepare journal entries, where appropriate, for the following transactions during January. Jan 2 Purchased $8,000 merchandise, 2/10, n/30. FOB Shipping Point Jan 4 The responsible party paid the freight bill of $75 Jan 8 Returned $600 of merchandise purchased on Jan 2 receiving credit memo Jan 12 Paid amount owed for January 2 Jan 14 Sold $4,000 of merchandise, 1/10, n/30, FOB Destination. Cost of the merchandise was $1,500 Jan 16 The responsible party paid the freight bill of $50 Jan 24 Collected amount owed from January 14 Jan 29 Sold $2,000 of merchandise, n/30, FOB Shipping Point. Cost of the merchandise was $750 Jan 31 The responsible party paid the freight bill of $50 Prepare a multi-step Income Statement for the month of January using the above information and the additional information below: Sales Salaries $800 Property Taxes $300 Interest Expense $200 Insurance $400 Advertising $700 What is the balance in Inventory account at January 31?
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.
Practice Quiz
Retail Transactions
- ABC Co. began operations on January 1. Please prepare
journal entries , where appropriate, for the following transactions during January.
Jan 2 Purchased $8,000 merchandise, 2/10, n/30. FOB Shipping Point
Jan 4 The responsible party paid the freight bill of $75
Jan 8 Returned $600 of merchandise purchased on Jan 2 receiving credit memo
Jan 12 Paid amount owed for January 2
Jan 14 Sold $4,000 of merchandise, 1/10, n/30, FOB Destination. Cost of the merchandise was $1,500
Jan 16 The responsible party paid the freight bill of $50
Jan 24 Collected amount owed from January 14
Jan 29 Sold $2,000 of merchandise, n/30, FOB Shipping Point. Cost of the merchandise was $750
Jan 31 The responsible party paid the freight bill of $50
- Prepare a multi-step Income Statement for the month of January using the above information and the additional information below:
Sales Salaries $800 Property Taxes $300 Interest Expense $200
Insurance $400 Advertising $700
- What is the balance in Inventory account at January 31?
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