The following Trial Balance has been extracted from the ledger of Mr. Yousef, a sole trader. Dr. Cr. GH¢ GH¢ Sales 138,078 Purchases 82,350 Carriages 5,144 Drawings 7,800 Rent, rates and insurance 6,622 Postage and Stationery 3,001 Advertising 1,330 Wages and Salaries 26,420 Bad Debts 877 Provision for Bad Debts 130 Debtors 12,120 Creditors 6,471 Cash in hand 177 Cash at Bank 1,002 Stock as at 1st June, 1995 11,927 Equipment: at Cost 58,000 Accumulated depreciation 19,000 Capital 53,091 216,770 216,770 The following additional information as at 31st May, 2006 is available. Rent is accrued by GH¢210. Rates have been prepaid by GH¢880. GH¢2,211 of carriage represents carriage purchases. Equipment is to be depreciated at 15% per annum, using reducing balance method. The provision for Bad debts to be reduced by GH¢40. Stock at the close of business has been valued at GH¢13,551. Required: Prepare trading and profit and loss accounts for the year ended 31st May, 2006 and a balance sheet as that date.
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 following
Dr. Cr.
GH¢ GH¢
Sales 138,078
Purchases 82,350
Carriages 5,144
Drawings 7,800
Rent, rates and insurance 6,622
Postage and Stationery 3,001
Advertising 1,330
Wages and Salaries 26,420
Provision for Bad Debts 130
Debtors 12,120
Creditors 6,471
Cash in hand 177
Cash at Bank 1,002
Stock as at 1st June, 1995 11,927
Equipment: at Cost 58,000
Capital 53,091
216,770 216,770
The following additional information as at 31st May, 2006 is available.
- Rent is accrued by GH¢210.
- Rates have been prepaid by GH¢880.
- GH¢2,211 of carriage represents carriage purchases.
- Equipment is to be depreciated at 15% per annum, using
reducing balance method . - The provision for Bad debts to be reduced by GH¢40.
- Stock at the close of business has been valued at GH¢13,551.
Required:
Prepare trading and
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