Young Traders is owned by Yvonne Young. Young Traders is not a VAT vendor and uses the perpetual inventory system. Goods are sold at a mark-up of 50% on cost price. The following pre-adjustment trial balance appeared in the books of Young Traders at the end of their current financial year, 30 April 2020: Pre-adjustment Trial Balance of Young Traders as at 30 April 2020 Debit (R) Credit (R) Capital (1 May 2019) 1 200 000 Vehicles 550 000 Accumulated Depreciation on Vehicles (1 May 2019) 205 000 Fixed deposit (ABBA Bank) (12% p.a.) 75 000 Inventory 149 000 Debtors Control 123 500 Allowance for Credit Losses (1 May 2019) 2 500 Creditors Control 50 100 Bank 199 400 Sales 1 467 500 Cost of Sales 914 000 Sales Returns 70 000 Salaries and Wages 640 000 Stationery 84 500 Carriage on Sales 23 700 Credit Losses 13 500 Telephone 82 500 R2 925 100 R2 925 100
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.
1. Journalise adjustments 2, 3, 7 and 8 only. (Narrations are not required)
Remember to show all your workings.
2. Prepare the Statement of profit or loss and other comprehensive income of Young Traders for the year ended 30 April 2020. Remember to show all your working, and if the amount is added or subtracted.
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