Tom loves cooking and after attending culinary school, he decided to start his own eatery in downtown Vancouver in May. Since he did not receive formal business, he has asked you to help him prepare monthly financial statements. He was able to collect all business receipt and financial records. The following are transactions for the month of January 2022, the first month of operations. Jan 1 Tom invested his saving of $350,000 into business bank account at TD Bank and he also borrowed &150,000 as 24 months bank loan. Jan 1 Signed lease contract and secured the location Jan 1 Purchased a one-year insurance policy for $24,000 in cash. Jan 2 Tom purchased kitchen equipment for $150,000 and $1000 kitchen supplies including napkins and clean supplies in cash Jan 1 he hired a soul chef and one receptionist. In contract, he will pay the soul chef $5,000 per month and receptionist $3,000 per month Jan 2 Tom purchased $100,000 furniture in cash Jan 3 Tom hired a renovation company to do lease improvement. Jan 23 Tom completed his renovation and paid the renovation job $75,000 in cash Jan 24 Tom purchased $30,000 ingredients as weekly inventories Jan 24Tom had a grand open and generated $25,000 sales in cash and the cost of goods sold for the day was $5,000 Jan 25 Tom generated $15,000 sales in cash and the cost of goods sold for the day was $2,000 Jan 25 Tom launched a web campaign on Daily Hive, which costed him $5,000 and he needed to pay the bill in 5 days. Jan 26 Tom received weekend booking for corporate social event and the client made prepaid $25,000 Jan 27 Over the end, Tom provided the service to his corporate client and the cost of goods sold was $10,000 Jan 28, Tom made the payment to invoice from Daily Hive Jan 29 Tom generated $10,000 sales and the cost of goods sold was $2,000 Jan 30th closed the business for day Jan 31 Tom paid his soul chef and receptionist monthly salaries. Jan 31 Tom also paid $3,000 dividend himself Requirements: a. Preparejournalentries b. Prepare income statement, retained earning statement and balance sheet
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.
Tom loves cooking and after attending culinary school, he decided to start his own eatery in downtown Vancouver in May. Since he did not receive formal business, he has asked you to help him prepare monthly financial statements. He was able to collect all business receipt and financial records. The following are transactions for the month of January 2022, the first month of operations.
Jan 1 Tom invested his saving of $350,000 into business bank account at TD Bank and he also borrowed &150,000 as 24 months bank loan.
Jan 1 Signed lease contract and secured the location
Jan 1 Purchased a one-year insurance policy for $24,000 in cash.
Jan 2 Tom purchased kitchen equipment for $150,000 and $1000 kitchen supplies including napkins and clean supplies in cash
Jan 1 he hired a soul chef and one receptionist. In contract, he will pay the soul chef $5,000 per month and receptionist $3,000 per month
Jan 2 Tom purchased $100,000 furniture in cash
Jan 3 Tom hired a renovation company to do lease improvement.
Jan 23 Tom completed his renovation and paid the renovation job $75,000 in cash
Jan 24 Tom purchased $30,000 ingredients as weekly inventories
Jan 24Tom had a grand open and generated $25,000 sales in cash and the cost of goods sold for the day was $5,000
Jan 25 Tom generated $15,000 sales in cash and the cost of goods sold for the day was $2,000
Jan 25 Tom launched a web campaign on Daily Hive, which costed him $5,000 and he needed to pay the bill in 5 days.
Jan 26 Tom received weekend booking for corporate social event and the client made prepaid $25,000
Jan 27 Over the end, Tom provided the service to his corporate client and the cost of goods sold was $10,000
Jan 28, Tom made the payment to invoice from Daily Hive
Jan 29 Tom generated $10,000 sales and the cost of goods sold was $2,000 Jan 30th closed the business for day
Jan 31 Tom paid his soul chef and receptionist monthly salaries.
Jan 31 Tom also paid $3,000 dividend himself
Requirements:
a. Preparejournalentries
b. Prepare income statement,
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