Binbutti Engineering, a sole proprietorship, completed the following transactions during July 2023, the third month of operations: July 1 Bob Binbutti, the owner, invested $300,000 cash, office equipment with a value of $12,000, and $90,000 of drafting equipment in the business. July 2 Purchased land for an office. The land was worth $108,000, which was paid with $10,800 cash and a long-term note payable for $97,200. July 3 Purchased a portable building with $150,000 cash and moved it onto the land. July 5 Paid $12,000 cash for the premiums on two one-year insurance policies. July 7 Completed and delivered a set of plans for a client and collected $1,400 cash. July 9 Purchased additional drafting equipment for $45,000. Paid $21,000 cash and signed a long-term note payable for the $24,000 balance. July 10 Completed $4,000 of engineering services for a client. This amount is to be paid within 30 days. July 12 Purchased $4,500 of additional office equipment on credit. July 15 Completed engineering services for $7,000 on credit. July 16 Received a bill for rent on equipment that was used on a completed job. The $13,800 rent must be paid within 30 days. July 17 Collected $400 from the client of July 10. July 19 Paid $12,000 wages to the drafting assistants. July 22 Paid the account payable created on July 12. July 25 Paid $1,350 cash for some repairs to an item of drafting equipment. July 26 Binbutti withdrew $800 cash from the business for personal use. July 30 Paid $12,000 wages to the drafting assistants. July 31 Paid $6,000 cash for advertising in the local newspaper during July. Job to do. Present the table of the effect of transactions, same as exercise 1, on the accounting equation using the identified account Consider the following balances as of June 30, 2023: Cash (101) $26,000; Accounts Receivable (106) $3,000; Prepaid Insurance (128) $500; Office Equipment (163) $1,700; Drafting Equipment (167) $1,200; Building (173) $42,000; Land (183) $28,000; Accounts Payable (201) $1,740; Long-Term Notes Payable (251) $24,000; Bob Binbutti, Capital (301) $54,000; Bob Binbutti, Withdrawals (302) $1,000; Engineering Revenue (401) $29,600; Wages Expense (623) $4,000; Equipment Rental Expense (645) $1,000; Advertising Expense (655) $640; and Repairs Expense (684) $300. Prepare The financial statement for Binbutti Engineering in the following order: Income Statement Statement of changes in owner’s equity
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.
Binbutti Engineering, a sole proprietorship, completed the following transactions during July 2023, the third month of operations:
July 1 Bob Binbutti, the owner, invested $300,000 cash, office equipment with a value of $12,000, and $90,000 of drafting equipment in the business.
July 2 Purchased land for an office. The land was worth $108,000, which was paid with $10,800 cash and a long-term note payable for $97,200.
July 3 Purchased a portable building with $150,000 cash and moved it onto the land.
July 5 Paid $12,000 cash for the premiums on two one-year insurance policies.
July 7 Completed and delivered a set of plans for a client and collected $1,400 cash.
July 9 Purchased additional drafting equipment for $45,000. Paid $21,000 cash and signed a long-term note payable for the $24,000 balance.
July 10 Completed $4,000 of engineering services for a client. This amount is to be paid within 30 days.
July 12 Purchased $4,500 of additional office equipment on credit.
July 15 Completed engineering services for $7,000 on credit.
July 16 Received a bill for rent on equipment that was used on a completed job. The $13,800 rent must be paid within 30 days.
July 17 Collected $400 from the client of July 10.
July 19 Paid $12,000 wages to the drafting assistants.
July 22 Paid the account payable created on July 12.
July 25 Paid $1,350 cash for some repairs to an item of drafting equipment.
July 26 Binbutti withdrew $800 cash from the business for personal use.
July 30 Paid $12,000 wages to the drafting assistants.
July 31 Paid $6,000 cash for advertising in the local newspaper during July.
Job to do.
- Present the table of the effect of transactions, same as exercise 1, on the
accounting equation using the identified account
- Consider the following balances as of June 30, 2023: Cash (101) $26,000;
Accounts Receivable (106) $3,000; Prepaid Insurance (128) $500; Office Equipment (163) $1,700; Drafting Equipment (167) $1,200; Building (173) $42,000; Land (183) $28,000; Accounts Payable (201) $1,740; Long-Term Notes Payable (251) $24,000; Bob Binbutti, Capital (301) $54,000; Bob Binbutti, Withdrawals (302) $1,000; Engineering Revenue (401) $29,600; Wages Expense (623) $4,000; Equipment Rental Expense (645) $1,000; Advertising Expense (655) $640; and Repairs Expense (684) $300.
- Prepare The financial statement for Binbutti Engineering in the following order:
- Income Statement
- Statement of changes in owner’s equity
Step by step
Solved in 4 steps with 8 images
