Prepare the necessary adjusting entries on December 31, 2020 to adjust the given items below. The following information relates to Joy Catering Services for the Calendar Year ending December 31, 2020. 1. The enterprise paid P34,000 insurance premium on April 1, 2020 covering one year up to March 31, 2021. On April 1, 2020, this was recorded by a debit to prepaid insurance and credit to cash. 2. On January 2, 2020, when a business was started, the owner bought equipment at a cost of P200,000. The equipment was estimated to last for 10 years (useful life) with an estimated salvage value of P20,000 at the end of its life. 3. On October 4, 2020, Joy received P50,000, 12% note receivable from a customer. The note was dated October 1, 2020 and will mature in 1 year. 4. As of December 31, 2020, Joy estimated that P8,000 accounts receivable becomes uncollectible, hence requiring adjustments. 5. The unused office supplies account showed a P12,000 debit balance as of December 31, 2020. A count however, showed the remaining unused supplies is P2,400.
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 the necessary
The following information relates to Joy Catering Services for the Calendar Year ending December 31, 2020.
1. The enterprise paid P34,000 insurance premium on April 1, 2020 covering one year up to March 31, 2021. On April 1, 2020, this was recorded by a debit to prepaid insurance and credit to cash.
2. On January 2, 2020, when a business was started, the owner bought equipment at a cost of P200,000. The equipment was estimated to last for 10 years (useful life) with an estimated salvage value of P20,000 at the end of its life.
3. On October 4, 2020, Joy received P50,000, 12% note receivable from a customer. The note was dated October 1, 2020 and will mature in 1 year.
4. As of December 31, 2020, Joy estimated that P8,000 accounts receivable becomes uncollectible, hence requiring adjustments.
5. The unused office supplies account showed a P12,000 debit balance as of December 31, 2020. A count however, showed the remaining unused supplies is P2,400.
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