Prepare journal entries. Susan’s Shoe Shop opened on January 1. The following transactions took place during the first month: 1.Deposited $30,000 in the firm’s checking account. 2.Purchased shoes, boots, socks, and other inventory for $45,000 on account. 3.Purchased display shelving, chairs, and other fixtures for $10,000 cash and $40,000 on account. Assume a useful life of five years and record annual depreciation. 4.Obtained $20,000 and signed a three-year, $20,000 bank loan at 8% annual interest. Accrue interest at the year end.5.Had sales revenue during January of $75,000. Of this amount, $25,000 was received in cash and the balance was on account. 6.The cost of the merchandise sold in item 5 was $12,000. 7.Paid $10,000 to each of two different creditors. 8.Signed an application for a one-year insurance policy and paid the year’s premium of $2,400. 9.Paid three employees a monthly salary of $2,000 each. 10.Collected $35,000 from customers. 11. Acquired a patent for $5,000 cash, which estimated useful life is 10 years. Calculate annual amortization. 12. Recorded utilities expense not paid at the year end $500
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.
Prepare
Susan’s Shoe Shop opened on January 1. The following transactions took place during the first month:
1.Deposited $30,000 in the firm’s checking account.
2.Purchased shoes, boots, socks, and other inventory for $45,000 on account.
3.Purchased display shelving, chairs, and other fixtures for $10,000 cash and $40,000 on account. Assume a useful life of five years and record annual depreciation.
4.Obtained $20,000 and signed a three-year, $20,000 bank loan at 8% annual interest. Accrue interest at the year end.5.Had sales revenue during January of $75,000. Of this amount, $25,000 was received in cash and the balance was on account.
6.The cost of the merchandise sold in item 5 was $12,000.
7.Paid $10,000 to each of two different creditors.
8.Signed an application for a one-year insurance policy and paid the year’s premium of $2,400.
9.Paid three employees a monthly salary of $2,000 each.
10.Collected $35,000 from customers.
11. Acquired a patent for $5,000 cash, which estimated useful life is 10 years. Calculate annual amortization.
12. Recorded utilities expense not paid at the year end $500
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