PROBLEM On January 1, 20X1, Ms. Yama Ha opened a guitar repair shop called “Guitar Doc”. The following were the transactions during the year: 1. Ms. Yama invested Php 100,000 cash to the business. 2. The business purchased supplies worth Php 60,000. Guitar Doc uses the expense method. 3. Total service fees billed to clients, on account, amounted to Php 400,000. 4. Total collections on accounts receivable amounted to Php 270,000. 5. Ms. Yama took Php 60,000 cash from the business. 6. Total salaries paid amounted to Php 180,000. Additional information: a. Billy Sheehan, one of the debtors, is undergoing financial difficulties. Of the total Php 50,000 accounts receivable from Billy Sheehan, only Php 40,000 is sure of collection; Php 10,000 is doubtful. b. Unused supplies at the end of the period amounted to Php 20,000. c. Unpaid employee salaries amounted to Php 30,000.
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.
PROBLEM
On January 1, 20X1, Ms. Yama Ha opened a guitar repair shop called “Guitar Doc”. The
following were the transactions during the year:
1. Ms. Yama invested Php 100,000 cash to the business.
2. The business purchased supplies worth Php 60,000. Guitar Doc uses the expense
method.
3. Total service fees billed to clients, on account, amounted to Php 400,000.
4. Total collections on
5. Ms. Yama took Php 60,000 cash from the business.
6. Total salaries paid amounted to Php 180,000.
Additional information:
a. Billy Sheehan, one of the debtors, is undergoing financial difficulties. Of the total Php
50,000 accounts receivable from Billy Sheehan, only Php 40,000 is sure of collection;
Php 10,000 is doubtful.
b. Unused supplies at the end of the period amounted to Php 20,000.
c. Unpaid employee salaries amounted to Php 30,000.
Step by step
Solved in 6 steps with 5 images
