The balance sheet of Adams Pharmacy after the revenue, expense, and partner’s drawing accounts have been closed on December 31, 20X1, follows: ADAMS PHARMACY Balance Sheet December 31, 20X1 Assets Cash $82600 Accounts Receivable 16200 Merchandise Inventory 423000 Equipment $166000 Accumulated Depreciation-Equipment 97000 69000 Building 404000 Accumulated Depreciation-Building 322000 82000 Land 42000 Total Assets $714800 Liabilities and Partner’s Equity Liabilities Accounts Payable 406400 Taxes Payable 22400 Total Liabilities 428800 Partner’s Equity Larry Adams, Capital 162000 Hazel Adams, Capital 62000 Isiah Adams, Capital 62000 Total Partners’ Equity 286000 Total Liabilities and Partner’s Equity $714800 On that date, Larry Adams, Hazel Adams, and Isiah Adams agree to admit Vickie Neal to the partnership. The partnership agreement provides that, in case of dissolution of the partnership, all assets and liabilities should be revalued. Profits and losses are shared in the ration of 50:25:25, to Larry, Hazel, and Isiah, respectively. The agreed-upon values of the assets are as follows: Accounts receivable $15200 Building $127000 Merchandise inventory 400400 Land 91000 Equipment 69000 Vickie Neal invested $120000 Assume that after the revaluation had been recorded, the existing partners and Vickie Neal decided that their previous agreement should be canceled and that Vickie Neal should not become a partner. Instead, the partners agreed that Hazel Adams would withdraw from the partnership and and be paid cash by the partnership. 1. Prepare the general journal entry to record the payment to Hazel Adams if she is paid an amount equal to her capital account balance after the revaluation.
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.
The
ADAMS PHARMACY
Balance Sheet
December 31, 20X1
Assets
Cash $82600
Merchandise Inventory 423000
Equipment $166000
Building 404000
Accumulated Depreciation-Building 322000 82000
Land 42000
Total Assets $714800
Liabilities and Partner’s Equity
Liabilities
Accounts Payable 406400
Taxes Payable 22400
Total Liabilities 428800
Partner’s Equity
Larry Adams, Capital 162000
Hazel Adams, Capital 62000
Isiah Adams, Capital 62000
Total Partners’ Equity 286000
Total Liabilities and Partner’s Equity $714800
On that date, Larry Adams, Hazel Adams, and Isiah Adams agree to admit Vickie Neal to the
Accounts receivable $15200 Building $127000
Merchandise inventory 400400 Land 91000
Equipment 69000
Vickie Neal invested $120000
Assume that after the revaluation had been recorded, the existing partners and Vickie Neal decided that their previous agreement should be canceled and that Vickie Neal should not become a partner. Instead, the partners agreed that Hazel Adams would withdraw from the partnership and and be paid cash by the partnership.
1. Prepare the general
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2. Prepare the general
3. Prepare the general journal entry to record the payment to Hazel Adams if she is paid an amount equal to $10200 more than her capital account balance after revaluation.
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