Required: Prepare Veras' June 30 journal entry to account for cash received from Moose University. Include the revenue to be recognized for June 1 – June 30, as well as any necessary adjustments to revenue presumed to have been previously recorded. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Record the service revenue earned in June.
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.
Veras Bus Transportation provides on-campus bus services for universities. On January 1, it enters into a one-year contract with Moose University to operate five bus lines traveling throughout the campus. Under the contract, Veras will be paid $110,000 on the last day of each month. In addition, Veras will receive an additional $130,000 at the end of each six-month period, provided it remains free of accidents.
- On January 1, based on historical experience, Veras estimated that there is a 70% chance that it will remain free of accidents for the entire year.
- On March 20, three of the most senior drivers at Veras abruptly left. As a result, Veras had to hire inexperienced drivers to fill the vacant positions. Consequently, Veras revised its estimate to a 30% chance that it would be entitled to receive the semiannual bonus and decided to continue this 30% probability estimate until its six-month review at the end of June.
- On June 30, Moose confirmed that there was no accident between January and June, so Veras would be entitled to the semiannual bonus.
Veras bases estimates of variable consideration on the most likely amount it expects to receive.
Required:
Prepare Veras' June 30
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Record the service revenue earned in June.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
