Problem 3In connection with your observation of the DalandanManufacturing Company, you reviewed its inventory as of December 31, 2019 and found the following items: ➢A packing case containing a product costing P100,000 was standing in the shipping room when the physical inventory was taken. It was not included inthe inventory because it was marked “Hold for shipping instructions.” The customer’s order was dated December 18, but the case was shipped and the costumer billed on January 10, 2020. ➢Merchandise costing P600,000 was received on December 28, 2019, and the invoice was recorded. The invoice was in the hands of the purchasing agent; it was marked “On consignment”. ➢Merchandise received on January 6, 2020, costing P800,000 was entered in purchase register on January 7. The invoice showed shipment was made FOBshipping point on December 31, 2019. Because it was not on hand during the inventory count, it was not included. ➢A special machine costing P200,000, fabricated to order for a particular customer, was finished in the shipping room on December 30. The customer was billed for P300,000 on that date and the machine was excluded from inventory although it was shipped January 4, 2020. ➢Merchandise costing P300,000 was received on January 6, 2020, and the related purchase invoice was recorded January 5. The invoice showed the shipment was made on December 29, 2016, FOB destination. ➢Merchandise costing P150,000 was sold on an installment basis on December 15. The customer took possession of the goods on that date. The merchandise was included in inventory becauseDalandan still holds legal title. Historical experience suggests that full payment on installment sale is received approximately 99% of the time. ➢Goods costing P600,000 were sold and delivered on December 20. The goods were included in the inventory because the sale was accompanied by a purchase agreement requiring Dalandan to buy back the inventory in February 2020.
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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