Question 1 Jenny Lee operates a store and sells items on cash and credit to her customers. The following trial balance was extracted from her records: Jenny Lee Trial Balance as at 2019 March 31 Debit Credit S S Purchases and sales 224 000 419 700 Inventory (2018 April 01) 51 600 72 000 Capital (2018 April 01) Bank overdraft 43 500 Cash 900 Carriage inwards 4600 Discounts allowed and received 14400 9 300 8100 5700 Returns inwards and outwards Carriage outwards 21 600 Rent and insurance 17 400 6600 20 000 Provision for doubtful debts Office equipment Delivery vans Drawings 27 000 28 800 Bad debts written off 400 4500 General office expenses Provision for depreciation: Office equipment Delivery vans 8 000 5400 Wages and salaries 89 000 Receivables and payables 119 100 61 200 631 400 631 400 Additional information: i. Inventory as at 2019 March 31 was valued at $42 900. ii. Wages and salaries accrued $2 100 and office expenses owing $200 as at 2019 March 31. iii. Rent prepaid was $1 800 as at 2019 March 31. iv. Provision for doubtful debts was to be increased to $8 000. v. Provide for depreciation on office equipment at 20% per annum on the straight line method. vi. Provide for depreciation on delivery vans at 20% per annum on the reducing balance method. 22/05 Page 2 Prepare: A. Income Statement for year ended 2019 March 31. B. Statement of Financial Position as at 2019 March 31. AUCTION
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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