You have been provided with the end of year, unadjusted trial balance for City Movers LTD and a list of balance day adjustments to be entered into the General Journal. CITY MOVERS UNADJUSTED TRIAL BALANCE AS AT 31st August 2021 Cash at bank 60080 Accounts Receivable 68250 Allowance for Doubtful Debts 1500 Prepaid Insurance 3600 Moving Van 45000 Acc. Depreciation- Van 9000 Capital – Gui Nash 102000 Drawings – Gui Nash 16,500 Fees Revenue 90930 Moving staff wages 10000 Total 203430 203430 Additional Information The annual Insurance policy was paid on 1st June 2021. An Accounts Receivable of $750 is uncollectable and is to be written off. The policy is to have the Allowance for Doubtful Debts equal to 2% of accounts receivable Moving van is depreciated at 10% per annum straight line method. Wages amounting to $ 950 had been incurred but not been paid as at 31st August 2021. Required: Provide the General Journal entries, (narrations not required) for the: i) Balance day adjustments; ii) Closing entries; and Reversing entries
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.
You have been provided with the end of year, unadjusted
CITY MOVERS
UNADJUSTED TRIAL BALANCE AS AT 31st August 2021
|
Cash at bank |
60080 |
|
|
|
68250 |
|
|
Allowance for Doubtful Debts |
1500 |
|
|
Prepaid Insurance |
3600 |
|
|
Moving Van |
45000 |
|
|
Acc. Depreciation- Van |
9000 |
|
|
Capital – Gui Nash |
102000 |
|
|
Drawings – Gui Nash |
16,500 |
|
|
Fees Revenue |
90930 |
|
|
Moving staff wages |
10000 |
|
|
Total |
203430 |
203430 |
Additional Information
- The annual Insurance policy was paid on 1st June 2021.
- An Accounts Receivable of $750 is uncollectable and is to be written off. The policy is to have the Allowance for Doubtful Debts equal to 2% of accounts receivable
- Moving van is
depreciated at 10% per annumstraight line method . - Wages amounting to $ 950 had been incurred but not been paid as at 31st August 2021.
Required:
- Provide the General
Journal entries , (narrations not required) for the:
- i) Balance day adjustments;
- ii) Closing entries; and
- Reversing entries
Step by step
Solved in 4 steps with 3 images
