This problem is based on the transactions for the Kind Matters Company in your text. Prepare journal entries for each transaction and identify the financial statement impact of each entry. The financial statements are automatically generated based on the journal entries recorded. December 1 On December 1, Jim Kennedy forms a consulting business, named Kind Matters. Kind Matters receives $42,000 cash from Jim Kennedy as an owner contribution. December 2 Kind Matters pays $3,100 cash for supplies. The company's policy is to record all prepaid expenses in asset accounts. December 3 Kind Matters pays $38,000 cash for equipment. December 4 Kind Matters purchases $8,050 of supplies on credit from a supplier, CalTech Supply. December 5 Kind Matters provides consulting services and immediately collects $4,800 cash. December 6 Kind Matters pays $1,600 cash for December rent. December 7 Kind Matters pays $1,300 cash for employee salary. December 8 Kind Matters provides consulting services of $2,200 and rents its test facilities for $900. The customer is billed $3,100 for these services. December 9 Kind Matters receives $3,100 cash from the client billed on December 8. December 10 Kind Matters pays CalTech Supply $1,500 cash as partial payment for its December 4 $8,050 purchase of supplies. December 11 Jim Kennedy withdraws $800 cash from Kind Matters for personal use. December 12 Kind Matters receives $3,600 cash in advance of providing consulting services to a customer. The company's policy is to record fees collected in advance in a balance sheet account. December 13 Kind Matters pays $3,000 cash (insurance premium) for a 24-month insurance policy. Coverage begins on December 1. The company's policy is to record all prepaid expenses in a balance sheet account. December 14 Kind Matters pays $720 cash for supplies. December 15 Kind Matters pays $905 cash for December utilities expense. December 16 Kind Matters pays $1,000 cash in employee salary for work performed in the latter part of December.
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.
This problem is based on the transactions for the Kind Matters Company in your text. Prepare
| December 1 | On December 1, Jim Kennedy forms a consulting business, named Kind Matters. Kind Matters receives $42,000 cash from Jim Kennedy as an owner contribution. |
|---|---|
| December 2 | Kind Matters pays $3,100 cash for supplies. The company's policy is to record all prepaid expenses in asset accounts. |
| December 3 | Kind Matters pays $38,000 cash for equipment. |
| December 4 | Kind Matters purchases $8,050 of supplies on credit from a supplier, CalTech Supply. |
| December 5 | Kind Matters provides consulting services and immediately collects $4,800 cash. |
| December 6 | Kind Matters pays $1,600 cash for December rent. |
| December 7 | Kind Matters pays $1,300 cash for employee salary. |
| December 8 | Kind Matters provides consulting services of $2,200 and rents its test facilities for $900. The customer is billed $3,100 for these services. |
| December 9 | Kind Matters receives $3,100 cash from the client billed on December 8. |
| December 10 | Kind Matters pays CalTech Supply $1,500 cash as partial payment for its December 4 $8,050 purchase of supplies. |
| December 11 | Jim Kennedy withdraws $800 cash from Kind Matters for personal use. |
| December 12 | Kind Matters receives $3,600 cash in advance of providing consulting services to a customer. The company's policy is to record fees collected in advance in a |
| December 13 | Kind Matters pays $3,000 cash (insurance premium) for a 24-month insurance policy. Coverage begins on December 1. The company's policy is to record all prepaid expenses in a balance sheet account. |
| December 14 | Kind Matters pays $720 cash for supplies. |
| December 15 | Kind Matters pays $905 cash for December utilities expense. |
| December 16 | Kind Matters pays $1,000 cash in employee salary for work performed in the latter part of December. |
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