On July 1, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company's first month. July 2 Plume invested $30,000 cash and buildings worth $150,000 in the company in exchange for its common stock. July 3 The company rented equipment by paying $2,000 cash for the first month’s (July) rent. July 5 The company purchased $2,400 of office supplies for cash. July 10 The company paid $7,200 cash for a 12-month insurance policy. Coverage begins on July 11. July 14 The company paid $1,000 cash for two weeks' salaries earned by employees. July 24 The company collected $9,800 cash for storage revenue from customers. July 28 The company paid $1,000 cash for two weeks' salaries earned by employees. July 29 The company paid $950 cash for minor repairs to buildings. July 30 The company paid $400 cash for this month's telephone bill. July 30 The company paid $2,000 cash in dividends. The company's chart of accounts follows: 101 Cash 403 Commissions Revenue 106 Accounts Receivable 612 Depreciation Expense—Buildings 124 Office Supplies 622 Salaries Expense 128 Prepaid Insurance 637 Insurance Expense 167 Buildings 640 Rent Expense 168 Accumulated Depreciation—Buildings 650 Office Supplies Expense 209 Salaries Payable 684 Repairs Expense 307 Common Stock 688 Telephone Expense 318 Retained Earnings 901 Income Summary 319 Dividends Required: Prepare an unadjusted trial balance as of July 31. Account Title Debit Credit Totals
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.
On July 1, Lula Plume created a new self-storage business, Safe Storage Co. The following transactions occurred during the company's first month.
July 2 |
Plume invested $30,000 cash and buildings worth $150,000 in the company in exchange for its common stock. |
July 3 |
The company rented equipment by paying $2,000 cash for the first month’s (July) rent. |
July 5 |
The company purchased $2,400 of office supplies for cash. |
July 10 |
The company paid $7,200 cash for a 12-month insurance policy. Coverage begins on July 11. |
July 14 |
The company paid $1,000 cash for two weeks' salaries earned by employees. |
July 24 |
The company collected $9,800 cash for storage revenue from customers. |
July 28 |
The company paid $1,000 cash for two weeks' salaries earned by employees. |
July 29 |
The company paid $950 cash for minor repairs to buildings. |
July 30 |
The company paid $400 cash for this month's telephone bill. |
July 30 |
The company paid $2,000 cash in dividends. |
The company's chart of accounts follows:
101 |
Cash |
403 |
Commissions Revenue |
106 |
|
612 |
|
124 |
Office Supplies |
622 |
Salaries Expense |
128 |
Prepaid Insurance |
637 |
Insurance Expense |
167 |
Buildings |
640 |
Rent Expense |
168 |
|
650 |
Office Supplies Expense |
209 |
Salaries Payable |
684 |
Repairs Expense |
307 |
Common Stock |
688 |
Telephone Expense |
318 |
|
901 |
Income Summary |
319 |
Dividends |
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Required:
Prepare an unadjusted
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Debit |
Credit |
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Use the following information to prepare
a.Prepaid insurance of $400 expired this month.
b.At the end of the month, $1,525 of office supplies are still available.
c.This month’s
d.Employees earned $100 of unpaid and unrecorded salaries as of month-end.
e. The company earned $1,150 of storage revenue that is not yet recorded at month-end.
No |
Transaction |
General Journal |
Debit |
Credit |
1 |
a. |
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2 |
b. |
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3 |
c. |
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4 |
d. |
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5 |
e. |
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