usty Krab Inc. started business on January 1, 2022. Record the required journal entry (F-I) or adjusting journal entry (J,K) for each of the following events which happened during 2022. If no entry is required, please state so and very briefly explain why. F) Customers paid $23,000 in advance payments for goods that will be delivered later. G) Equipment that cost $120,000 was purchased on October 1 for $20,000 cash plus a two-year, 10% note with a principal amount of $800,000. H) Wages totaling $42,000 were paid to employees during the year. I) The board of directors declared dividends of $10,000 in December 2022, to be paid in January 2021. J) Recorded the insurance expense for the year. K) The depreciation expense for the equipment purchased (in item G) on October 1, 2022, was calculated to be $1,000.
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.
Accounting
Krusty Krab Inc. started business on January 1,
2022.
Record the required
following events which happened during 2022. If no entry is required, please state
so and very briefly explain why.
F) Customers paid $23,000 in advance payments for goods that will be delivered
later.
G) Equipment that cost $120,000 was purchased on October 1 for $20,000 cash
plus a two-year, 10% note with a principal amount of $800,000.
H) Wages totaling $42,000 were paid to employees during the year.
I) The board of directors declared dividends of $10,000 in December 2022, to be
paid in January 2021.
J) Recorded the insurance expense for the year.
K) The
2022, was calculated to be $1,000.
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