You have been called upon to help Sarah Singer with her newly established graphic design business. Singer has decided to lease a rented office space and is planning to operate the new business on a full-time basis. The business is known as Sarah's Designs, Inc. Singer's company had the following business transactions during the first month of operation in September 20XX: Sept 1. To launch the new business, the following assets were initially contributed by Sarah Singer in exchange for common stock: Cash, $25,800; Accounts Receivable, $4,500; Supplies, $2,500; and Office Equipment, $16,500. Sept 1. Paid three months' rent in advance on a new lease rental contract, $3,600. Sept 2. Paid the premiums on property and casualty insurance policies, $1,800. (This total insurance policy premium covers six months) Sept 4. Received cash from the Gaines Company (a new client) as an advance payment for services to be provided, and the amount will be recorded as Unearned Revenue for $4,200. Sept 5. Purchased a new computer on account from Brown's Computer Nook for $3,600. The useful life of the computer has been estimated to be 5 years. Sept 6. Received cash from clients for services performed on account for $2,600. Sept 9. Paid cash to the Mason Tribune for a newspaper advertisement, $240. Sept 12. Recorded services provided on account for various clients for the period of September 1 - 12, for $5,700. Sept 13. Paid Brown's Computer Nook for part of the liability incurred earlier (back on Sept 5), $690. Sept 14. Paid part-time receptionist for two weeks' salary, $1,100. Sept 17. Paid cash for supplies, $1,000. Sept 20. Purchased additional office equipment on account from Cabrillo Office Supply store for $2,650. Sept 20. Recorded services provided on account for various clients for the period of September 13 - 20, $4,360. Sept 24. Received cash from clients for fees earned during the period of September 17 - 24 (not on account), $6,100. Sept 26. Received cash from clients on account from September 12 services, $2,200. Sept 28. Paid part-time receptionist for two weeks' salary, $1,100. Sept 29. Paid telephone bill for September, $370. Sept 29. Paid electricity bill for September, $515. Sept 30. Recorded cash from clients for fees earned for the period of September 25 - 30 (not on account), $3,450. Sept 30. Recorded services provided on account for the remainder of September, $2,100. Sept 30. Paid dividends of $2,500. Adjustment data for Sarah's Designs, Inc., as of September 30, 20XX: Prepaid Insurance expired during September is $300. Supplies on hand on September 30 have a total value of $2,130. Monthly depreciation of office equipment is $320. Monthly depreciation of computer is $60. Prepaid Rent expired during September is $1,200. Accrued receptionist salary on September 30 is $200. Unearned Revenue balance on Sept 30 amounts to $3,600. Record the general journal entries for the business transactions. Post the business transactions to the general ledger. Prepare an unadjusted trial balance for September 30, 20XX.
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.
You have been called upon to help Sarah Singer with her newly established graphic design business. Singer has decided to lease a rented office space and is planning to operate the new business on a full-time basis. The business is known as Sarah's Designs, Inc. Singer's company had the following business transactions during the first month of operation in September 20XX:
Sept 1. To launch the new business, the following assets were initially contributed by Sarah Singer in exchange for common stock: Cash, $25,800;
Sept 1. Paid three months' rent in advance on a new lease rental contract, $3,600.
Sept 2. Paid the premiums on property and casualty insurance policies, $1,800. (This total insurance policy premium covers six months)
Sept 4. Received cash from the Gaines Company (a new client) as an advance payment for services to be provided, and the amount will be recorded as Unearned Revenue for $4,200.
Sept 5. Purchased a new computer on account from Brown's Computer Nook for $3,600. The useful life of the computer has been estimated to be 5 years.
Sept 6. Received cash from clients for services performed on account for $2,600.
Sept 9. Paid cash to the Mason Tribune for a newspaper advertisement, $240.
Sept 12. Recorded services provided on account for various clients for the period of September 1 - 12, for $5,700.
Sept 13. Paid Brown's Computer Nook for part of the liability incurred earlier (back on Sept 5), $690.
Sept 14. Paid part-time receptionist for two weeks' salary, $1,100.
Sept 17. Paid cash for supplies, $1,000.
Sept 20. Purchased additional office equipment on account from Cabrillo Office Supply store for $2,650.
Sept 20. Recorded services provided on account for various clients for the period of September 13 - 20, $4,360.
Sept 24. Received cash from clients for fees earned during the period of September 17 - 24 (not on account), $6,100.
Sept 26. Received cash from clients on account from September 12 services, $2,200.
Sept 28. Paid part-time receptionist for two weeks' salary, $1,100.
Sept 29. Paid telephone bill for September, $370.
Sept 29. Paid electricity bill for September, $515.
Sept 30. Recorded cash from clients for fees earned for the period of September 25 - 30 (not on account), $3,450.
Sept 30. Recorded services provided on account for the remainder of September, $2,100.
Sept 30. Paid dividends of $2,500.
Adjustment data for Sarah's Designs, Inc., as of September 30, 20XX:
Prepaid Insurance expired during September is $300.
Supplies on hand on September 30 have a total value of $2,130.
Monthly
Monthly depreciation of computer is $60.
Prepaid Rent expired during September is $1,200.
Accrued receptionist salary on September 30 is $200.
Unearned Revenue balance on Sept 30 amounts to $3,600.
Record the general
Post the business transactions to the general ledger.
Prepare an unadjusted
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For Course Project Milestone 2: (due at the end of Week 5)
- Record the
adjusting entries . Post the adjusting entries to the general ledger.- Prepare the adjusted
trial balance . - Prepare the financial statements for the month of September.
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