The following data were selected from the records of Sykes Company for the year ended December 31, current year. Balances January 1, current year Accounts receivable (various customers) Allowance for doubtful accounts In the following order, except for cash sales, the company sold merchandise and made collections on credit terms 2/10, n/30 (assume a unit sales price of $500 in all transactions). Transactions during current year: a. Sold merchandise for cash, $235,000. b. Sold merchandise to R. Smith; invoice price, $11,500. c. Sold merchandise to K. Miller; invoice price, $26,500. d. Two days after purchase date, R. Smith returned one of the units purchased in (b) and received account credit. e. Sold merchandise to B. Sears; invoice price, $24,000. a. b. C. d. f. R. Smith paid his account in full within the discount period. g. Collected $98,000 cash from customer sales on credit in prior year, all within the discount periods. e. h. K. Miller paid the invoice in (c) within the discount period. i. Sold merchandise to R. Roy; invoice price, $19,000. j. Three days after paying the account in full, K. Miller returned seven defective units and received a cash refund. k. After the discount period, collected $6,000 cash on an account receivable on sales in a prior year. Required: . Using the following categories, indicate the effect of each listed transaction, including the write-off of the uncollectible account an he adjusting entry for estimated bad debts (ignore cost of goods sold). The first transaction is used as an example. Note: Any decrease in account balances should be indicated by a minus sign. Transaction 1. Wrote off a prior year account of $3,000 after deciding that the amount would never be collected. m. The estimated bad debt rate used by the company was 1.5 percent of credit sales net of returns. $ 120,000 8,000 Sales Revenue $ 235,000 11,500 26,500 24,000 Sales Sales Discounts Returns and Allowances (taken) 500 Bad Debt Expense
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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