Scenario: Assume that a relatively new company you and you group members are involved with has presented you with the following transactions for 2021 from the books of the business. This company operates one bank account to reflect all cash and cheque transactions. You are now required to read these transactions carefully then prepare the relevant documents and books as outlined in the requirements below. 1 Aug Started business with $150, 000 in the bank 3 Aug Bought supplies on credit from Right Way Manufacturers 24 Boxes Air Filter $720.00 per box $200.00 per bottle $300.00 per box $580.00 per box $400.00 per box 96 Bottles fuel injector cleaner 48 Boxes Spark Plug 36 Boxes Brake Shoe 24 Boxes Disc Pads 5 Aug Provided services for cash less 10% discount 12 small motorbike engines 6 large motorbike engines (full service) 8 medium size motorbike engines (full service) $350.00 per engine $950.00 per engine $800.00 per engine 7 Aug Paid Rent by cheque $5,000.00 10 Aug Paid Wages by cheque $8,000.00 10 Aug Bought Fixtures from CT Limited paying by cash $3,500.00 11 Aug Provided services on credit to Auto Care. 24 small motorbike engines 8 large motor bike engines (partial service) 12 medium size motorbike engine (partial service) $350.00 per engine $650.00 per engine $550.00 per engine 12 Aug Bought Fixtures on credit from CT Ltd $8,000.00 13 Aug Received a loan from NBC cash $25,000.00 14 Aug Provided services on credit to P&S Auto 18 Large motorbike engines (full service) 12 medium size motor bike engines 24 medium size motorbike engines 20 small motorbike engines $950.00 per engine $650.00 per engine $550.00 per engine $350.00 per engine 21 Aug Paid CT Ltd by cheque $8,000.00
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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Rent Expense
Wages Expense
Supplies Expense
Fixtures
Auto Care
Loan NBC
Discount Received
Electricity Expense
Drawings
Requirements:
- Extract a
trial balance on August 31st. - Prepare an Income Statement for the month ended August 31st, the owner’s equity statement and a
Balance Sheet as at that date
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