Transactions for the first 3-month period of calendar year 2021 for Sta Cruz Branch of XYZ Company. Home Office put up a branch with initial investment of cash 400,000; and equipment 180,000, and furniture & fixtures, 100,000, both to be booked in the branch. Home office purchased equipment for use by the branch and to be carried in the Home Office books. Acquisition cost is 80,000. Branch purchased 160,000 worth of merchandise for 50% cash and balance on account. Delivery charge of 3,000 paid by the branch. Home Office ordered office table and chairs worth 20,000 to be carried in branch books. The branch paid cash for the items upon delivery directly to the branch. Delivery charge of 800 was also paid by the branch. Branch purchased computers and printers worth 110,000 for use of the branch and to be booked in the Home Office. Home Office transferred merchandise worth 320,000. Home Office paid for the freight of 5,000 to be taken up in branch books. Branch total sales to date on account is 600,000 and cash 100,000. Home Office collected 100,000 from Branch’s customers on account. Branch collected 460,000 from customers on account. Branch share from Home Office in advertising and office supplies expenses are 10,000 and 3,000, respectively. Branch salaries paid to its staff is 80,000 and unpaid utilities incurred is 6,000 Branch remitted cash of 300,000 to Home Office. Straight line method of depreciation is used for all the fixed assets with 5% of their costs as scrap value. All of the equipment are expected to last for 5 year, while Furniture & Fixtures for 10 years. The branch operates only for 3-month period (the 1st quarter of calendar year 2022. Rqrmnt: The Inventory in the Branch at the end of the period is 60,000. Prepare the income statement and determine the Branch profit for the first 3 month of its operation.
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.
Transactions for the first 3-month period of calendar year 2021 for Sta Cruz Branch of XYZ Company.
- Home Office put up a branch with initial investment of cash 400,000; and equipment 180,000, and furniture & fixtures, 100,000, both to be booked in the branch.
- Home office purchased equipment for use by the branch and to be carried in the Home Office books. Acquisition cost is 80,000.
- Branch purchased 160,000 worth of merchandise for 50% cash and balance on account. Delivery charge of 3,000 paid by the branch.
- Home Office ordered office table and chairs worth 20,000 to be carried in branch books. The branch paid cash for the items upon delivery directly to the branch. Delivery charge of 800 was also paid by the branch.
- Branch purchased computers and printers worth 110,000 for use of the branch and to be booked in the Home Office.
- Home Office transferred merchandise worth 320,000. Home Office paid for the freight of 5,000 to be taken up in branch books.
- Branch total sales to date on account is 600,000 and cash 100,000.
- Home Office collected 100,000 from Branch’s customers on account.
- Branch collected 460,000 from customers on account.
- Branch share from Home Office in advertising and office supplies expenses are 10,000 and 3,000, respectively.
- Branch salaries paid to its staff is 80,000 and unpaid utilities incurred is 6,000
- Branch remitted cash of 300,000 to Home Office.
Straight line method ofdepreciation is used for all the fixed assets with 5% of their costs as scrap value. All of the equipment are expected to last for 5 year, while Furniture & Fixtures for 10 years. The branch operates only for 3-month period (the 1st quarter of calendar year 2022.
Rqrmnt:
- The Inventory in the Branch at the end of the period is 60,000. Prepare the income statement and determine the Branch profit for the first 3 month of its operation.
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