Valley Company's adjusted account balances from its general ledger on August 31, its fiscal year-end, follows. It categorizes the following accounts as selling expenses: sales salaries expense, rent expense-selling space, store supplies expense, and advertising expense. It categorizes the remaining expenses as general and administrative. Adjusted Account Balances Debit Credit Merchandise inventory (ending) $ 34, 500 Other (non-inventory) assets 138,000 Total liabilities $ 39,848 K. Valley, Capital 115, 114 K. Valley, Withdrawals 8,000 Sales 235, 980 Sales discounts 3,610 Sales returns and allowances 15, 575 Cost of goods sold 91,673 Sales salaries expense 32, 329 Rent expense- Selling space 11,091 Store supplies expense 2, 832 Advertising expense 20,058 Office salaries expense 29,498 Rent expense-Office space 2, 832 Office supplies expense 944 Totals $ 390,942 $ 390, 942 Beginning merchandise inventory was $27,842. Supplementary records of merchandising activities for the year ended August 31 reveal the following itemized costs. Invoice cost of merchandise purchases $ 101,430 Purchases discounts received 2, 130 Purchases returns and allowances 4, 869 Costs of transportation - in 3,900 Required: Prepare closing entries as of August 31 (the perpetual inventory system is used).
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.
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