Required: For the above transactions construct the following: Books of original entry and the posting to respective ledgers. Trial balance.
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.
Winnie Café commenced his business on 1 October 2015 as café proprietor. All credit purchases period of 30 days and cash discount of 5%. Whereas all credit sales are based on 30 days and cash discount of 2%.
The following are the account balances of Winnie Café after closing the books at the end of January 31, 2021.
RM
Cash in hand 15,500
Bank overdraft 12,640
Stock 8,800
Office equipment 20,000
Furniture 14,500
Loan from AMB Bank 25,000
Capital ???
The following are the transactions for the month of February 2021:
Feb 1 Bought food from Sani Bhd. RM2,480 at list price. Less 10% trade discount. (Invoice No. 3415).
4 Purchased of colour printers from Speed Computer by cheque RM4,500. (Invoice No. 231)
5 Manan made an additional investment RM6,000 cash.
6 credit sales to John Woo RM1,600 at list price. Less trade discount 5%. (Invoice No. 441).
7 Cash Sales RM600.
8 Credit sales to James RM800, no trade discount given (Invoice No. 442)
9 Bought fruits from Fresh Fruiters RM1,900 at list price. Less trade discount 8% (Invoice No. 322).
10. Credit sales to Manian Trading RM950 less trade discount 5% (Invoice No. 443).
11. Paid insurance RM3,300 by cheque.
12 Purchased furniture from Weng Fatt Enterprise RM2,800 (Invoice No. 5678).
12 Transferred RM800 from bank to business cash till.
12 Returned spoil fruits RM250 to Fresh Fruiters (Credit Note No. 12).
13 Paid by cheque for fruit and vegetables RM690.
13 Received cash RM500 from G Bhd for returned damaged office equipment.
13 Received return of damaged goods from Manian Trading RM100. (Credit Note No. 28)
14 Banked cash sales RM1,680.
15 Withdrawal of goods RM500 by Manan for family usage.
15 Bought additional office equipment from Mart Bhd RM1,200 on credit.
16. Credit sales to Frank RM650, no trade discount given (Invoice No. 444).
17. Withdrawal of cash from bank RM1,000 for business cash till.
18 Paid Sani Bhd for purchases made on 1 Feb by cheque.
20 Received a cheque payment from John Woo for sales made on Feb 6.
21 Received a cheque payment from Manian Trading for sales made on Feb 10.
22 Credit sales to Frank RM800 less trade discount 10% (Invoice No 445).
25 Paid salary RM2,000 by cheque.
26 Paid carriage RM500 in cash for carry goods to debtors.
28 Cash withdrawal RM2,000 by Manan.
***Assume the closing stock at the end of February amounted to RM7,550
Required:
For the above transactions construct the following:
- Books of original entry and the posting to respective ledgers.
Trial balance .
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