There were following activities occurred during the first month of Babara Schmidt's new hair cutting business called The Cutlery: a. On August 1, Schmidt put $3,000 cash into a chequing account in the name of The Cutlery. She also invested $15,000 of equipment that she already owned. b. On August1, Schmidt paid $600 cash for six months of insurance effective immediately. c. On August2, she paid $600 cash for furniture for the shop. d. On August3, she paid $900 cash to rent space in a strip mall for August. e. On August4, she furnished the shop by installing the old equipment and some new equipment that she bought on credit for $1,200. This amount is to be repaid in three equal payments at the end of August, September, and October. f. On August5, Cash receipts from haircutting services provided in the first week and a half of business (ended August15) were $225. g. On August 15, Schmidt provided haircutting services on account for $100. h. On August 17, Schmidt received a $100 cheque in the mail for services previously rendered on account. i. On August17, Schmidt paid $125 to an assistant for working during the grand opening. j. On August18, Schmidt interviewed a job applicant. The applicant was successful in getting the position and will receive $750 per week for part-time work starting in September. k. On August 18, a regular customer paid $500 for services to be provided over the next three month. 1. Cash receipts from haircutting rendered during the 2nd half of August were $530. m. On August31, Schmidt paid an instalment on the accounts payable n. On August31, the August hydro bill for $75 was received. It will be paid on September 14. o. On August31, she withdrew $200 cash for her personal use. Required: • Prepare necessary journal entries for above activities occurred during the August.
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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