2021 TRANSACTIONS August 1 Phil Trading purchased merchandise from Webb Inc., P5,000; terms: 2/20, n/30; FOB SP, freight collect. 3 Merchandise was purchased from Heaven Co., P10,000; terms:5-5, 2/10 EOM; FOB destination, freight prepaid; freight cost, P80. 5 Phil Trading paid freight on shipment from Webb Inc., P120. 5 Merchandise was sold to Brian Inc., P7,000 cash. 6 Phil Trading paid freight on shipment to Brian Inc., P250. 8 Phil Trading returned P500 defective goods purchased August 1 from Webb Inc. 10 Cash of P1,000 was refunded to Brian Inc., for allowances granted due to defective goods sold. 12 Merchandise with list price of P8,500 was sold to Bambi Co.; terms: 10-10, 2/10, n/30; FOB SP, freight collect; freight cost of P180. 15 Phil Trading sold merchandise sold to Sulu Co., P12,000; terms: 10 EOM; FOB SP, freight prepaid; freight cost P360. 18 Merchandise was sold to Pan Co., P15,000; terms: 1/15, n/60; FOB destination, freight collect; freight cost P505. 20 Phil Trading received a credit memo from Heaven Co., for merchandise returned worth P500 from purchases made last August 3. 21 Phil Trading settled account with Webb Inc., in full. 22 Bambi Co. settled its account in full. 23 Phil Trading received returned goods worth $2,000 from Pan and issued a credit memo. 24 Phil Trading paid account to Heaven Co., in full.
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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