Thoro Clean, a firm providing house-cleaning services, began business on April 1. The following accounts in its general ledger are needed to record the transactions for April: Cash; Accounts Receivable; Supplies; Prepaid Van Lease; Equipment; Accounts Payable; Notes Payable Common Stock; Retained Earnings; Dividends; Cleaning Fees Earned; Wage Expense; Advertising Expense; and Fuel Expense. April 1 Randy Storm invested $13,000 cash to begin the business; he received common stock for his investment. 2 Paid six months' lease on a van, $3,250. 3 Borrowed $10,400 from a bank and signed a note payable agreeing to repay the $10,400 in one year plus 10 percent interest. 3 Purchased $5,900 of cleaning equipment; paid $2,900 down with the remainder due within 30 days. 4 Purchased cleaning supplies for $4,700 cash. 7 Paid $750 for newspaper advertisements to run during April. 21 Billed customers for services, $4,900. 23 Paid $1,400 on account to cleaning equipment firm (see April 3 transaction). 28 Collected $2,700 from customers on account. 29 Randy Storm received a $1,400 cash dividend. 30 Paid wages for April, $2,150. 30 Paid service station for gasoline used during April, $495. Accounting Equation Journal Entries b. Use journal entries to record the transactions for April in the general journal. Date Description Debit Credit April 1 Answer Answer Answer Answer Answer Answer Owner purchased common stock for cash. 2 Answer Answer Answer Answer Answer Answer Paid six months' lease on van. 3 Answer Answer Answer Answer Answer Answer Borrowed money from bank for one year, interest rate of 10%. 3 Answer Answer Answer Cash Answer Answer Answer Answer Answer Purchased equipment, made down payment with balance due in 30 days. 4 Answer Answer Answer Answer Answer Answer Purchased supplies for cash. 7 Answer Answer Answer Answer Answer Answer Paid for April advertising. 21 Answer Answer Answer Answer Answer Answer Billed customers for services. 23 Answer Answer Answer Answer Answer Answer Payment on account. 28 Answer Answer Answer Answer Answer Answer Collections from customer on account. 29 Answer Answer Answer Answer Answer Answer Shareholders are paid a cash dividend. 30 Answer Answer Answer Answer Answer Answer Paid wages for April. 30 Answer Answer Answer Answer Answer Answer Paid for gasoline used in April.
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.
Thoro Clean, a firm providing house-cleaning services, began business on April 1. The following accounts in its general ledger are needed to record the transactions for April: Cash; Accounts Receivable; Supplies; Prepaid Van Lease; Equipment; Accounts Payable; Notes Payable Common Stock;
| April | 1 | Randy Storm invested $13,000 cash to begin the business; he received common stock for his investment. |
| 2 | Paid six months' lease on a van, $3,250. | |
| 3 | Borrowed $10,400 from a bank and signed a note payable agreeing to repay the $10,400 in one year plus 10 percent interest. | |
| 3 | Purchased $5,900 of cleaning equipment; paid $2,900 down with the remainder due within 30 days. | |
| 4 | Purchased cleaning supplies for $4,700 cash. | |
| 7 | Paid $750 for newspaper advertisements to run during April. | |
| 21 | Billed customers for services, $4,900. | |
| 23 | Paid $1,400 on account to cleaning equipment firm (see April 3 transaction). | |
| 28 | Collected $2,700 from customers on account. | |
| 29 | Randy Storm received a $1,400 cash dividend. | |
| 30 | Paid wages for April, $2,150. | |
| 30 | Paid service station for gasoline used during April, $495. |
Accounting Equation Journal Entries
b. Use journal entries to record the transactions for April in the general journal.
| Date | Description | Debit | Credit | |
|---|---|---|---|---|
| April | 1 | Answer | Answer | Answer |
| Answer | Answer | Answer | ||
| Owner purchased common stock for cash. | ||||
| 2 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Paid six months' lease on van. | ||||
| 3 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Borrowed money from bank for one year, interest rate of 10%. | ||||
| 3 | Answer | Answer | Answer | |
| Cash | Answer | Answer | ||
| Answer | Answer | Answer | ||
| Purchased equipment, made down payment with balance due in 30 days. | ||||
| 4 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Purchased supplies for cash. | ||||
| 7 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Paid for April advertising. | ||||
| 21 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Billed customers for services. | ||||
| 23 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Payment on account. | ||||
| 28 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Collections from customer on account. | ||||
| 29 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Shareholders are paid a cash dividend. | ||||
| 30 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Paid wages for April. | ||||
| 30 | Answer | Answer | Answer | |
| Answer | Answer | Answer | ||
| Paid for gasoline used in April. |
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