The following is the transaction of the trading company "Mars" in December 2020 by using the "Periodic Inventory System" method. • On 2 December 2020 the company purchased $ 4,500 of merchandise on credit 2/10. • On December 5, 2020, the company pays cash delivery fees on the order dated December 2, 2020 for $ 200. • On December 6, 2020, the company sold merchandise online a 2/10 credit of $ 6,000. • On December 7, 2020, the company returned the purchase of goods done on December 2, 2020 for $ 500. • On 8 December 2020 the company purchased $ 3,500 of merchandise in cash. • On 12 December 2020 the company paid the invoice for the purchase of goods which are due with a 2% discount for payment in time 10 days. • On December 13, 2020 the company received sales returns from consumers for $ 500. • On December 16, 2020 the company received payment for merchandise which is sold on credit on December 6, 2020 by giving 2% discount on sales because it is naid on 10 davs

The following is the transaction of the trading company "Mars" in December 2020 by using the "Periodic Inventory System" method. • On 2 December 2020 the company purchased $ 4,500 of merchandise on credit 2/10. • On December 5, 2020, the company pays cash delivery fees on the order dated December 2, 2020 for $ 200. • On December 6, 2020, the company sold merchandise online a 2/10 credit of $ 6,000. • On December 7, 2020, the company returned the purchase of goods done on December 2, 2020 for $ 500. • On 8 December 2020 the company purchased $ 3,500 of merchandise in cash. • On 12 December 2020 the company paid the invoice for the purchase of goods which are due with a 2% discount for payment in time 10 days. • On December 13, 2020 the company received sales returns from consumers for $ 500. • On December 16, 2020 the company received payment for merchandise which is sold on credit on December 6, 2020 by giving 2% discount on sales because it is naid on 10 davs

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 6E

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Concept explainers

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.

Question

Do a Adjusting Entry

Trial Balance
Mars Trading Company
31/12/2020
Debit ($)
17.500
21.000
55.000
Account
|Credit ($)
Cash
Account Receivable
Inventory
Prepaid Insurance
Equipment
Accumulated Depreciation Equipment
Account Payable
|Share Capital Ordinary
Retained Earnings
2.500
45.000
7.500
15.000
55.000
25.000
Dividens
11.000
Sales Revenue
Sales Return and allowances
Sales Discounts
Cost of Goods Sols
Freight out
Advertising Expense
Salaries and Wages Expense
Utility Expense
Total
390.000
5.000
2.000
285.000
4.000
12.000
25.000
7.500
492.500
492.500

The following is the transaction of the trading company "Mars" in
December 2020 by using the "Periodic Inventory System" method.
• On 2 December 2020 the company purchased $ 4,500 of merchandise on
credit 2/10.
• On December 5, 2020, the company pays cash delivery fees on the order
dated December 2, 2020 for $ 200.
• On December 6, 2020, the company sold merchandise online a 2/10
credit of $ 6,000.
• On December 7, 2020, the company returned the purchase of goods done
on December 2, 2020 for $ 500.
• On 8 December 2020 the company purchased $ 3,500 of merchandise in
cash.
• On 12 December 2020 the company paid the invoice for the purchase of
goods which are due with a 2% discount for payment in time 10 days.
• On December 13, 2020 the company received sales returns from
consumers for $ 500.
• On December 16, 2020 the company received payment for merchandise
which is sold on credit on December 6, 2020 by giving 2% discount on sales
because it is paid on 10 days.

Definition Definition Entries made at the end of every accounting period to precisely replicate the expenses and revenue of the current period. This is also known as end of period adjustment. It can also refer to financial reporting that corrects errors made previously in the accounting period. Every adjustment entry affects at least one real account and one nominal account.

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