The following post-closing trial balance was drawn from the accounts of Little Grocery Supplier (LGS) as of December 31, Year 1. Cash Accounts receivable Allowance for doubtful accounts. Inventory Accounts payable Common stock Retained earnings Totals Transactions for Year 2 1. LGS acquired an additional $20,000 cash from the issue of common stock. 2. LGS purchased $85,000 of inventory on account. 3. LGS sold inventory that cost $91,000 for $160,000. Sales were made on account. Exercise 7-15A (Static) Part b Debit $9,000 41,000 78,000 4. The company wrote off $900 of uncollectible accounts. 5. On September 1, LGS loaned $18,000 to Eden Company The note had an 8 percent interest rate and a one-year term. 6. LGS paid $19,000 cash for operating expenses. $ 128,000 7. The company collected $161,000 cash from accounts receivable. 8. A cash payment of $92,000 was paid on accounts payable. Beginning Balance 1. 7. Credit 9. The company paid a $5,000 cash dividend to the stockholders. 10. Accepted credit cards for sales amounting to $7,000. The cost of goods sold was $4,000. The credit card company charges a 4 percent service charge. The cash has not been received. 11. Uncollectible accounts are estimated to be 1 percent of sales on account. 12. Recorded the accrued interest at December 31, Year 2 (see item 5). Cash $ 2,500 21,000 50,000 54,500 $ 128,000 9,000 20,000 161,000 . Open T-accounts and record the beginning balances and the Year 2 transactions. 18,000 5. 19,000 6. 92,000 8. 5,000 9. Beginning Balance 8. Accounts Payable 92,000 21,000 85,000 2.
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.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
