PROBLEM #1 As at December 31, 2019, the accounting records of Soriano Medical Center showed the following balances after closing the temporary accounts: Account Debit Credit Cash 934,000 Accounts Receivable 1,450,000 Medical Supplies Prepaid Insurance 480,000 600,000 2,500,000 3,000,000 Land Medical Building Accumulated Depreciation - Medical Building 600,000 Medical Equipment 1,800,000 Accumulated Depreciation - Medical Equipment | Accounts Payable Notes Payable Soriano, Capital 180,000 1,200,000 5,400,000 3,384,000 10,764,000 10,764,000 Update the balances at December 31, 2020 considering the following: 1. Rendered medical services amounting to P10,650,000, 60% of this amount is collected whi the 40% has been billed. 2. 95% of the accounts receivable outstanding as of December 31,2019 were collected in 202 The management foresees doubtful collection of the remaining 5%. 3. Medical supplies were purchased, P200,000. 4. The building is expected to be used for 20 years while the medical equipment is to be used for 10 years. 5. The prepaid insurance of P600,000 pertains to the unexpired portion for the remaining 20 months. 6. The note payable consist of the following: Note A Note B Principal 4,000,000 1,400,000 Interest Rate (annual) Maturity 12% 15% December 31, 2025| September 30, 2020 "Note B was fully paid upon maturity. The interest on Note A was paid on January 4, 2021. 7. Salaries expense for the year is at P1,250,000. P110,000 of this amount is to be paid on January 2021. 8. Other operating expenses not mentioned above amounted to P2,400,000. 9. Soriano Medical Center received P450,000 for commissioned research outputs. Research work will begin on 2021. 10. The owner transferred P350,000 from his personal account to Soriano Medical Center's bank account. 11. Medical supplies on hand is valued at P198,000. 12. Paid 75% of the accounts payable.
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.
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