Reyes and Cruz, partners who share profits in an 80% and 20% ratio, organized the RC Corporation to take over the partnership business. The RC Corporation is authorized to issue 10,000 shares of P20 par value capital stock, of which 5,500 shares are issued at P30 a share to the partners in accordance with their adjusted capital accounts. Statement of Fi RC Corporation also issued 1,000 shares for cash to the other incorporators at P30 a share. The statement of financial position of the partnership as of June 30, 2016, the date of incorporation, is shown below. Reyes and Cruz Partnership Statement of Financial Position As of June 3Assets Assets Cash P 24,000 Accounts receivable P 56,200 Less: Allowance for Bad Debts 1,200 55,000 Inventories 51,000 Equipment P 120,000 Total Assets P 198,000 Liabilities and Partners Equity Current Liabilities P 40,000 Notes payable Accounts payable 30,000 Total liabilities P 70,000 Equity: Reyes, capital Cruz, capital P 95,980 32,020 128,000 Total Liabilities and Capital P 198,000 ======== The partners agree to make the following adjustments before the incorporation: a. Increase the allowance for bad debts account to P2,000. b. Increase the cost of the inventories to its current market value of P60,000. c. Increase the historical cost of the equipment to its reproduction cost (new) of P140,000 and the accumulated depreciation to be increased to P61,000. d. Recognize accrued expenses of P2,200. e. Recognize goodwill of P20,000. Required: Prepare the necessary journal entries to record the incorporation of the partnership.
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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