Problem #4 Preparing the Adjusting Entries at Year-End On Nov. 30, 2019, the end of fiscal year, the following information is available to enable you to prepare Edgar Detoya Research and Development adjusting entries: The Supplies account showed a beginning balance of P21,740. Purchases during the vear were P45,260. The ending inventory revealed supplies on hand of P 13,970. а. The Prepaid Insurance account showed the following on November 30: Beginning balance July 1 P35,800 42,000 October 1 72,720 The beginning balance represented the unexpired portion of a one-year policy nurchased in September 2018. The July 1 entry represented a new one-year policy, and the Oct. 1 entry is additional coverage in the form of a three-year policy. C. The following table contains the cost and annual depreciation for buildings and equipment, all of which the entity purchased before the current year: Account Cost Annual Depreciation Buildings Equipment P2,860,000 P145,000 3,740,000 354,000 d. On September 1, the entity completed negotiations with a client and accepted an advance of P168,000 for services to be performed next year. The P168,000 was credited to Unearned Service Revenues. e. The entity calculated that as of November 30, it had earned P40,000 on an P110,000 contract that would be completed and billed in January. f. Among the liabilities of the entity is a note payable in the amount of P3,000,000. On November 30, the accrued interest on this note amounted to P150,000. 3. Assume that on, December 3, a Saturday, the entity, which is on a six-day workweek, will pay its regular salaried employees P123,000. . On November 29, the entity completed negotiations and signed a contract to provide services to a new client at an annual rate of P175,000.
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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