Selling and Administrative expenses Salaries Advertising Insurance Office Depreciation Other fixed costs Financing $70,000 per month $20,000 per month $ 1,500 per month Selling and administrative overhead are paid in the month incurred. $ 3,500 per month $ 4,000 per month The cash balance on December 31, 2021, totaled $200,800, but management has decided it would like to maintain a cash balance of at least $500,000 beginning on January 31, 2022. Purchases The company has an open line of credit with the National Bank. The terms of the agreement require borrowing to be in the increments of $10,000, and the interest rate is 5.5%. Al Khabeesi borrows on the first day of the month and repays on the last day of the month if possible. The company has decided to upgrade it's IT equipment in April 2022. The expected cost of this upgrade is $450,000. Depreciation on this equipment is expected to be at the rate of 30% on a straight-line basis. Additional information Balance in the retained earnings account are $60,000 on January 2022. There are no expected withdrawals. Income tax is expected to be levied at the rate of 10% p.a.
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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