While completing undergraduate school work in information systems, Dallin Bourne and Michael Banks decided to start a technology support company called eSys Answers. During year 1, they bought the following assets and incurred the following start-up fees: Year 1 Assets Computers (5-year) Office equipment (7-year) Furniture (7-year) Start-up costs Year 2 Assets Van Pinball machine (7-year) Customer list Purchase Date October 30, Year 1 October 30, Year 1 October 30, Year 1 October 30, Year 1 In April of year 2, they decided to purchase a customer list from a company providing virtually the same services, started by fellow information systems students preparing to graduate. The customer list cost $12,340, and the sale was completed. on April 30. During their summer break, Dallin and Michael passed on internship opportunities in an attempt to really grow their business into something they could do full time after graduation. In the summer, they purchased a small van (for transportation, not considered a luxury auto) and a pinball machine (to help attract new employees). They bought the van on June 15, Year 2, for $28,000 and spent $4,300 getting it ready to put into service. The pinball machine cost $5,300 and was placed in service on July 1, Year 2. Purchase Date June 15, Year 2 July 1, Year 2 April 30, Year 2 Basis $ 16,300 10,000 5,600 19,340 Basis $ 32,300 5,300 12,340 Assume that eSys Answers does not claim any §179 expense or bonus depreciation. (Use MACRS Table 1. Table 2. Table 3, Table 4 and Table 5.) Note: Round your intermediate calculations and final answers to the nearest whole dollar amount. Year 1 Year 2 Required: a. What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2? c. What is eSys Answers' basis in each of its assets at the end of Year 2? Complete this question by entering your answers in the tabs below. Required A Required C What are the maximum cost recovery deductions for eSys Answers for Year 1 and Year 2? Recovery Deduction
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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