Prepare the adjusting journal entries. Show all the calculations. Write the name of entries and account numbers. Complete the General Journal.
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.
Company «Julian» was founded in 2015 as a LLC. The main activity of the company is selling the vacuum cleaners. You were hired as an independent expert to prepare the financial statements for 2018 year.
Required:
Prepare the adjusting
Additional data:
Reporting date for the company – December 31, 2018.
The company should prepare the financial statements according to International Accounting Standards (IAS/IFRS).
The company uses the periodic inventory system.
All the initial entries were made in 2018.
The reporting currency – current units (CU)
You have to analyze the following transactions:
The company uses the periodic inventory system of inventory accounting and the FIFO costing method. On December 1, 2018 the company had 30 units of inventory costing 51,000 CU per unit. During December there were made the following purchases:
December 6 – 10 units for 49000 CU per unit;
December 12 – 25 units for 50000 CU per unit;
December 27 – 20 units for 51500 CU per unit.
Based on the inventory taking, on December 31, 2018 there were 60 units of Inventory remaining. The cost of goods sold has not been reflected yet.
Salaries are paid every month on the 3rd day of the following month. The company also has to withdraw income taxes from employees’ salaries in the amount of 12% from the total accrued amount. The salaries for the month for administration personnel were 3000 CU, and for sales personnel – 2800 CU. No
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