Subsidiary ledger
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.
![Rainbow Merchandising Company completed the following transactions during July, 2020
2 Issued invoice no. 9013 for sale of merchandise on account to Gary Co., P16,400.
3 Purchased merchandise from Dolly Co., P10,000, credit terms 3/10, 2/60.
5 Sold merchandise for cash, P4,308
5 Issued check no. 235 to purchase furniture for cash, P8,740.
6 Purchased merchandise on account from Razel Co., P3,650.
7 The owner, Mr. Rain invested additional cash of P70,000.
8 Received interest revenue from bank deposit of P1,775.
9 Issued invoice no. 9014 to Echo Co., P22,200. FOB destination, P2,500. Credit terms:2/10, n/30.
July
Purchased merchandise and issued check no. 236 amounting to P12,000. Terms: 5% trade
10
discount. FOB shipping point.
11 Purchased supplies on account from Mala, P4,000. Terms: n/eom.
12 Received P16,072 from Gary Co. in full settlement of her account.
13 Issued check no. 236 to pay Dolly the net amount owed from July 3.
13 Purchased supplies on account from Mark Co., P1,764. Terms: n/eom.
14 Sold merchandise on account to Echo Co. issuing invoice no. 9015 for P3,550.
15 Issued check no. 237 to pay salaries of employees for the period of July 1-15, P8,500.
15 Sold merchandise on account to Rey Co. issuing invoice no. 9016 for P2,660.
16 Issued check no. 238 to pay Razel Co. the net amount owed on July 6, P3,577.
16 Purchased furniture on account from Dolly Co., P3,750.
17 Issued credit memo to Rey Co. for P2,660 for defective merchandise returned by the buyer.
18 Issued invoice no 9017 to Gary Co., P1,428. Trade discount of 10% is granted. Terms: 5/15, n/30.
19 Received a full collection from Echo Co. in full settlement of its account from July 9.
20 Purchased merchandise from Razel Co., P8,188. Credit terms net 30days
22 Purchased merchandise on credit from Dolly Co.P2,580.
22 Issued check no. 239 to pay for insurance coverage, debiting Prepaid Insurance for P4,000.
24 Sold supplies to an employee for cash, P2,216 at cost.
25 Issued check no. 240 to pay utilities, P5,812.
26 Sold merchandise on account to Rey Co., issuing invoice no. 9018 for P4,250.
27 Issued check no. 241 amounting P3,500 for payment of Mr. Rain personal liability to a friend.
28 Purchased merchandise from Mark Co., P21,700.
29 Refund cash to Mark Co for the returned of damaged merchandise, P 2,700.
29 Sold goods to Echo Co. issuing invoice no. 9019 for P5,984.
30 Issued check no. 241 to pay Mark Co., P1,764 on account from July 13.
31 Collected the full amount due from Gary Co.
31 Issued check no. 242 to pay the salaries for the period of July 16-31, P19,388.
Instructions:
A.
Open the following ledger accounts using the following account numbers given:
Sales Discounts
Sales Returns and Allowances
Interest Revenue
Purchases
Purchase Discounts
Purchase Returns and Allowances
Salary Expense
Utilities Expense
514 Freight-In
542 Transportation Out
111
Cash
412
Accounts Receivable
Supplies
Prepaid Insurance
112
413
419
116
511
117
151
Furniture
512
513
Equipment
Accounts Payable
Sales
311 Rain, Capital
312 Rain Drawing
152
531
211
541
411](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5fbc2c57-0861-457d-a6ad-e317762002fc%2F5af26ba8-aa3a-47ba-ab8f-acdc2ba929e8%2Fzhwg51_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![College Accounting (Book Only): A Career Approach](https://www.bartleby.com/isbn_cover_images/9781337280570/9781337280570_smallCoverImage.gif)
![College Accounting (Book Only): A Career Approach](https://www.bartleby.com/isbn_cover_images/9781305084087/9781305084087_smallCoverImage.gif)
![College Accounting (Book Only): A Career Approach](https://www.bartleby.com/isbn_cover_images/9781337280570/9781337280570_smallCoverImage.gif)
![College Accounting (Book Only): A Career Approach](https://www.bartleby.com/isbn_cover_images/9781305084087/9781305084087_smallCoverImage.gif)
![College Accounting, Chapters 1-27](https://www.bartleby.com/isbn_cover_images/9781337794756/9781337794756_smallCoverImage.gif)