The “Wise Dimension” owned by Mr. Cousins. Wise Dimension imports office supplies from all over the world, and supplies them via online and offline channels. Wise Dimension uses the Periodic Inventory method. The trial balance as at 31 May 2017 is as follows: Trial Balance as at 31 May 2017 Acct No. Account Name Acct No. Debit Credit 101 Cash at Bank 101 $90,600 105 Accounts Receivable 105 $76,800 110 Merchandise Inventory 110 $150,000 115 Supplies 115 $8,000 120 Prepaid Insurance 120 $17,000 135 Office Furniture 135 $35,000 137 Acc. Depreciation. – Furniture 137 $15,000 140 Office Equipment 140 $20,000 141 Acc. Depreciation - Office Equip. 141 $9,000 201 Accounts Payable 201 $44,960 202 Interest Payable 202 $4,000 210 Loan Payable 210 $30,000 301 Cousins, Capital 301 $20,000 305 Cousins, Drawings 305 $18,900 401 Sales Revenue 401 $705,000 402 Sales Returns 402 $55,000 403 Sales Discounts 403 $15,000 501 Purchases 501 $166,000 502 Purchase Returns 502 $20,000 503 Purchase Discounts 503 $33,000 504 Freight-in 504 $25,000 601 Advertising Expense 601 $50,000 605 Automobile Expense 605 $15,000 615 Depreciation Expense – Furniture 615 $0 620 Depreciation Expense - Office Equip. 620 $0 650 Insurance Expense 650 $0 665 Maintenance Expense 665 $28,500 670 Miscellaneous Expense 670 $15,500 675 Rent Expense 675 $77,200 680 Supplies Expense 680 $0 685 Utilities Expense 685 $35,500 690 Interest Expense 690 $3,300 700 Income Summary 700 $930,000 $930,000 Required: Ignore Income Tax Journalise the adjustment transactions for the month of June. Transactions during the month of June 2017 are listed below: Date Item Description 7/06/2017 Source Document: Sales invoice For the following: Made sales to SAN Entertainment (Customer) Amount: $30,000 Terms: Net 30 8/06/2017 Source Document: Receipts For the following: Received payment on account from Felicia Ltd (Customer) Amount: $22,600 Terms: Cash Tendered 9/06/2017 Source Document: Sales Return Slip For the following: SAN Entertainment (Customer) returned goods Amount: $6,000 Terms: Credit on account (Adjustment note) 10/06/2017 Source Document: Purchase Invoice For the following: Purchased inventory for resale from Dorothy Factory (Supplier) Amount: $88,000 Terms: Credit on account 15/06/2017 Source Document: Memo For the following: Cousins (Owner) took a selling product from the store for personal use Amount: $1,100 Terms: N/A 15/06/2017 Source Document: Purchase Invoice For the following: Domestic delivery costs of merchandise shipped to us at our expense. Amount: $3,300 Terms: Cash Tendered 15/06/2017 Source Document: Cheque Copy For the following: Payment on account to NWALA (Supplier) Amount: $8,000 Terms: Cash 30/06/2017 Source Document: Purchase Return For the following: Returned goods to Dorothy Factory (Supplier) Amount: $12,100 Terms: Credit on account (Adjustment note) Adjustment Transactions as at 30 June 2017 are: Date Item Description 30/06/2017 Source Document: Bank Memo For the following: Interest unrecorded and unpaid for the period. Rate: 1% interest per month on all outstanding loan at month end Terms: Interest should be accrued. 30/06/2017 Asset: 115 (Supplies) For the following: Adjustment for the period. Instructions: Make any adjustments as necessary. Ending Supplies inv. $2,500 30/06/2017 Asset: 120 (Prepaid Insurance) For the following: Adjustment for the period. Instructions: Make any adjustments as necessary. Ending Value $5,100 30/06/2017 Depreciable Asset: 135 (Furniture) For the following: Depreciation adjustment for the year Instructions: Make any adjustments as necessary. Rate: 20% of the carrying amount 30/06/2017 Depreciable Asset: 140 (Office Equipment) For the following: Depreciation adjustment for the year Instructions: Make any adjustments as necessary. Rate: 30% of the carrying amount Additional Information 30/06/2017 Asset: 110 (Merchandise Inventory) For the following: Financial Statement preparation Instructions: Make any adjustments as necessary. Opening Inventory $150,000 Ending Inventory $200,000
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 “Wise Dimension” owned by Mr. Cousins. Wise Dimension imports office supplies from all over the world, and supplies them via online and offline channels. Wise Dimension uses the Periodic Inventory method. The
|
Trial Balance as at 31 May 2017 |
||||
|
Acct No. |
Account Name |
Acct No. |
Debit |
Credit |
|
101 |
Cash at Bank |
101 |
$90,600 |
|
|
105 |
|
105 |
$76,800 |
|
|
110 |
Merchandise Inventory |
110 |
$150,000 |
|
|
115 |
Supplies |
115 |
$8,000 |
|
|
120 |
Prepaid Insurance |
120 |
$17,000 |
|
|
135 |
Office Furniture |
135 |
$35,000 |
|
|
137 |
Acc. Depreciation. – Furniture |
137 |
|
$15,000 |
|
140 |
Office Equipment |
140 |
$20,000 |
|
|
141 |
Acc. Depreciation - Office Equip. |
141 |
|
$9,000 |
|
201 |
Accounts Payable |
201 |
|
$44,960 |
|
202 |
Interest Payable |
202 |
|
$4,000 |
|
210 |
Loan Payable |
210 |
|
$30,000 |
|
301 |
Cousins, Capital |
301 |
|
$20,000 |
|
305 |
Cousins, Drawings |
305 |
$18,900 |
|
|
401 |
Sales Revenue |
401 |
|
$705,000 |
|
402 |
Sales Returns |
402 |
$55,000 |
|
|
403 |
Sales Discounts |
403 |
$15,000 |
|
|
501 |
Purchases |
501 |
$166,000 |
|
|
502 |
Purchase Returns |
502 |
|
$20,000 |
|
503 |
Purchase Discounts |
503 |
|
$33,000 |
|
504 |
Freight-in |
504 |
$25,000 |
|
|
601 |
Advertising Expense |
601 |
$50,000 |
|
|
605 |
Automobile Expense |
605 |
$15,000 |
|
|
615 |
Depreciation Expense – Furniture |
615 |
$0 |
|
|
620 |
Depreciation Expense - Office Equip. |
620 |
$0 |
|
|
650 |
Insurance Expense |
650 |
$0 |
|
|
665 |
Maintenance Expense |
665 |
$28,500 |
|
|
670 |
Miscellaneous Expense |
670 |
$15,500 |
|
|
675 |
Rent Expense |
675 |
$77,200 |
|
|
680 |
Supplies Expense |
680 |
$0 |
|
|
685 |
Utilities Expense |
685 |
$35,500 |
|
|
690 |
Interest Expense |
690 |
$3,300 |
|
|
700 |
Income Summary |
700 |
|
|
|
|
|
|
$930,000 |
$930,000 |
Required: Ignore Income Tax
- Journalise the adjustment transactions for the month of June.
Transactions during the month of June 2017 are listed below:
|
Date |
Item |
Description |
|
7/06/2017 |
Source Document: |
Sales invoice |
|
For the following: |
Made sales to SAN Entertainment (Customer) |
|
|
Amount: |
$30,000 |
|
|
Terms: |
Net 30 |
|
|
8/06/2017 |
Source Document: |
Receipts |
|
For the following: |
Received payment on account from Felicia Ltd (Customer) |
|
|
Amount: |
$22,600 |
|
|
Terms: |
Cash Tendered |
|
|
9/06/2017 |
Source Document: |
Sales Return Slip |
|
For the following: |
SAN Entertainment (Customer) returned goods |
|
|
Amount: |
$6,000 |
|
|
Terms: |
Credit on account (Adjustment note) |
|
|
10/06/2017 |
Source Document: |
Purchase Invoice |
|
For the following: |
Purchased inventory for resale from Dorothy Factory (Supplier) |
|
|
Amount: |
$88,000 |
|
|
Terms: |
Credit on account |
|
|
15/06/2017 |
Source Document: |
Memo |
|
For the following: |
Cousins (Owner) took a selling product from the store for personal use |
|
|
Amount: |
$1,100 |
|
|
Terms: |
N/A |
|
|
15/06/2017 |
Source Document: |
Purchase Invoice |
|
For the following: |
Domestic delivery costs of merchandise shipped to us at our expense. |
|
|
Amount: |
$3,300 |
|
|
Terms: |
Cash Tendered |
|
|
15/06/2017 |
Source Document: |
Cheque Copy |
|
For the following: |
Payment on account to NWALA (Supplier) |
|
|
Amount: |
$8,000 |
|
|
Terms: |
Cash |
|
|
30/06/2017 |
Source Document: |
Purchase Return |
|
For the following: |
Returned goods to Dorothy Factory (Supplier) |
|
|
Amount: |
$12,100 |
|
|
Terms: |
Credit on account (Adjustment note) |
Adjustment Transactions as at 30 June 2017 are:
|
Date |
Item |
Description |
|
|
30/06/2017 |
Source Document: |
Bank Memo |
|
|
For the following: |
Interest unrecorded and unpaid for the period. |
||
|
Rate: |
1% interest per month on all outstanding loan at month end |
||
|
Terms: |
Interest should be accrued. |
||
|
30/06/2017 |
Asset: |
115 (Supplies) |
|
|
For the following: |
Adjustment for the period. |
||
|
Instructions: |
Make any adjustments as necessary. |
||
|
Ending Supplies inv. |
$2,500 |
|
|
|
30/06/2017 |
Asset: |
120 (Prepaid Insurance) |
|
|
For the following: |
Adjustment for the period. |
||
|
Instructions: |
Make any adjustments as necessary. |
||
|
Ending Value |
$5,100 |
|
|
|
30/06/2017 |
|
135 (Furniture) |
|
|
For the following: |
Depreciation adjustment for the year |
||
|
Instructions: |
Make any adjustments as necessary. |
||
|
Rate: |
20% of the carrying amount |
||
|
30/06/2017 |
Depreciable Asset: |
140 (Office Equipment) |
|
|
For the following: |
Depreciation adjustment for the year |
||
|
Instructions: |
Make any adjustments as necessary. |
||
|
Rate: |
30% |
of the carrying amount |
Additional Information
|
30/06/2017 |
Asset: |
110 (Merchandise Inventory) |
|
For the following: |
Financial Statement preparation |
|
|
Instructions: |
Make any adjustments as necessary. |
|
|
Opening Inventory |
$150,000 |
|
|
Ending Inventory |
$200,000 |
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