Date Transaction Description July 1 Began business by making a deposit in a company bank account of $40,000, in exchange for 4,000 shares of $10 par value common stock. July 1 Paid the premium on a 1-year insurance policy, $4,800. July 1 Paid the current month's store rent expense, $3,600. July 6 Purchased repair equipment from Paul's Pool Equipment Company, $7,800. Paid $600 down and the balance was placed on account. July 8 Purchased repair supplies from Mary's Repair Company on credit, $450. July 10 Paid telephone bill, $300. July 11 Cash pool service revenue for the first third of July, $2,650. July 18 Made payment to Mary's Repair Company, $300. July 20 Cash pool service revenue for the second third of July, $4,000. July 31 Cash pool service revenue for the last third of July, $2,250. July 31 Paid the current month's electric bill, $500. July 31 Declared and paid cash dividend of $1,100. Requirement #4: Prepare adjusting entries using the following information in the General Journal below. Show your calculations! a) One month's insurance has expired. b) The remaining inventory of repair supplies is $250. c) The estimated depreciation on repair equipment is $160. d) The estimated income taxes are $95. Requirement #5: Post the adjusting entries on July 31 below to the General Ledger T-accounts (Step 2) and compute adjusted balances. Just add to the balances that are already listed.
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.
| Date | Transaction Description |
| July 1 | Began business by making a deposit in a company bank account of $40,000, in exchange for 4,000 shares of $10 par value common stock. |
| July 1 | Paid the premium on a 1-year insurance policy, $4,800. |
| July 1 | Paid the current month's store rent expense, $3,600. |
| July 6 | Purchased repair equipment from Paul's Pool Equipment Company, $7,800. Paid $600 down and the balance was placed on account. |
| July 8 | Purchased repair supplies from Mary's Repair Company on credit, $450. |
| July 10 | Paid telephone bill, $300. |
| July 11 | Cash pool service revenue for the first third of July, $2,650. |
| July 18 | Made payment to Mary's Repair Company, $300. |
| July 20 | Cash pool service revenue for the second third of July, $4,000. |
| July 31 | Cash pool service revenue for the last third of July, $2,250. |
| July 31 | Paid the current month's electric bill, $500. |
| July 31 | Declared and paid cash dividend of $1,100. |
|
|
| Requirement #4: Prepare a) One month's insurance has expired. b) The remaining inventory of repair supplies is $250. c) The estimated d) The estimated income taxes are $95. |
|
| Requirement #5: |
|
Trending now
This is a popular solution!
Step by step
Solved in 10 steps
