Problem: The beginning balances in ledger of DBM Corporation for September 01, 2018 were as follows; Account Debit Credit Accounts Payable 2,160 Accounts Receivable 3,070 Paid in capital- common stock 4,990 Cash 3,910 Notes Payable 600 Property, plant, and equipment (at cost) 6,200 Allowances for doubtful accounts 540 Inventories 1,730 Accumulated depreciation 2,800 Prepaid Expenses 1,250 Retained earnings 2,250 Good will 1,000 Estimated tax liability 750 Marketable securities 1,750 Accrued Expense 1,000 Patents and trademarks 500 Bonds payable 2,000 Investment 1,500 Deferred Revenue 1,000 Other liabilities-long term 1,000 20,000 20,000 During the month of September, the following transactions occurred; 1.Owner invested additional cash on common stock, Php 5,000. 2.Purchased inventory on account Php 1,300. 3.Advertising paid in cash Php 150. 4.Paid employees salaries Php 300. 5.Expired insurance, Php 250. 6.Sold goods in cash, Php 2,940 and on credit, Php 2,810. 7.Research and development expense paid in cash, Php 280. 8.Paid certain accounts payable, Php 1,720. 9.Selling, general administrative expenses paid on account, Php 255. 10.Collected accounts receivable Php 1,510. 11.Overhead and other expenses paid in cash Php 100. 12.Rent paid in advance Php 250. 13.Received cash for revenue applicable next period Php 650. 14.Increased the current notes payable by Php 200. 15.Sold goods for Php 1,500; returns and allowances, Php 200 and discounts, Php 100 16.Physical Inventory showed ending balance of php 1,750 17.Declared dividends paid Php 1,000 18.Bad debts, Php 45. 19.Depreciation expenses, Php 300 20.Interest earned and bank charges incurred on savings account, Php 100 and Php 50 respectively.
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: The beginning balances in ledger of DBM Corporation for September 01, 2018 were as follows;
| Account | Debit | Credit |
| Accounts Payable | 2,160 | |
| 3,070 | ||
| Paid in capital- common stock | 4,990 | |
| Cash | 3,910 | |
| Notes Payable | 600 | |
| Property, plant, and equipment (at cost) | 6,200 | |
| Allowances for doubtful accounts | 540 | |
| Inventories | 1,730 | |
| 2,800 | ||
| Prepaid Expenses | 1,250 | |
| 2,250 | ||
| Good will | 1,000 | |
| Estimated tax liability | 750 | |
| Marketable securities | 1,750 | |
| Accrued Expense | 1,000 | |
| Patents and trademarks | 500 | |
| Bonds payable | 2,000 | |
| Investment | 1,500 | |
| Deferred Revenue | 1,000 | |
| Other liabilities-long term | 1,000 | |
| 20,000 | 20,000 |
During the month of September, the following transactions occurred;
1.Owner invested additional cash on common stock, Php 5,000.
2.Purchased inventory on account Php 1,300.
3.Advertising paid in cash Php 150.
4.Paid employees salaries Php 300.
5.Expired insurance, Php 250.
6.Sold goods in cash, Php 2,940 and on credit, Php 2,810.
7.Research and development expense paid in cash, Php 280.
8.Paid certain accounts payable, Php 1,720.
9.Selling, general administrative expenses paid on account, Php 255.
10.Collected accounts receivable Php 1,510.
11.
12.Rent paid in advance Php 250.
13.Received cash for revenue applicable next period Php 650.
14.Increased the current notes payable by Php 200.
15.Sold goods for Php 1,500; returns and allowances, Php 200 and discounts, Php 100
16.Physical Inventory showed ending balance of php 1,750
17.Declared dividends paid Php 1,000
18.Bad debts, Php 45.
19.Depreciation expenses, Php 300
20.Interest earned and bank charges incurred on savings account, Php 100 and Php 50 respectively.
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