The following data were selected from the records of Tunga Company for the year ended December 31, current year: Balances at January 1, current year Accounts receivable (various customers) Allowance for doubtful accounts The company sells merchandise for cash and on open account with credit terms 2/10, n/30, without a right of return. The following transactions occurred during the current year: a. Sold merchandise for cash, $234,000. b. Collected $98,000 cash from customers for credit sales made during the prior year, all within the discount periods. c. Sold merchandise to R. Agostino on open account for $11,500. d. Sold merchandise to K. Black on open account for $25,000. e. R. Agostino paid his account in full within the discount period. f. Sold merchandise to B. Assaf on open account for $26,000. g. K. Black paid the invoice in (c) within the discount period. h. Sold merchandise to R. Fong on open account for $17,500. i. Collected $6,000 cash on an accounts receivable for sales made in November of the prior year. The amount was received after the discount period. j. Wrote off an old account of $3,000 after deciding that the amount would never be collected. k. The company estimates that 4 percent of the balance of accounts receivable at December 31 of the current year will be uncollectible in the future. $107,000 4,000 The company records sales revenue net of the sales discount. If a customer pays after the discount period, the sales discount that is forfeited is recorded in a separate account (sales discounts forfeited) and closed to sales revenue at the end of the accounting period. Required: Determine the balances of the accounts: sales revenue, accounts receivable, and allowance for doubtful accounts that will be reported in the financial statements for the current year. Assume that the amounts due from both B. Assaf and R. Fong have been outstanding for more than 10 days. (Hint: Use T-accounts to keep track of the effect of the above transactions on the three accounts.) Answer is complete but not entirely correct. Sales revenue Accounts receivable Allowance for doubtful accounts $ 313,270 43,500 2,740 $
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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