ez and Marshall are in Partnership operating a manufacturing business. They share profit in the ratio 3:2. The trial balance at December 31, 2020 was as follows: Trial Balance as at December 31, 2020 DR CR $ $ FactoryEquipment at cost 26,000 Office-Motor Vehicles at cost 36,800 Provision for depreciation at Dec 31, 2
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.
Mendez and Marshall are in
|
Trial Balance as at December 31, 2020 |
DR |
CR |
|
$ |
$ |
|
|
FactoryEquipment at cost |
26,000 |
|
|
Office-Motor Vehicles at cost |
36,800 |
|
|
Provision for |
||
|
Office-Equipment |
7,800 |
|
|
Office-Motor Vehicles |
14,720 |
|
|
Stock of Finish Goods at Dec 31, 2019 |
99,880 |
|
|
Debtors and Creditors |
83,840 |
65,100 |
|
Cash at Bank |
19272 |
|
|
Work in Progress at Dec 31, 2019 |
25,000 |
|
|
Direct Expenses |
18,900 |
|
|
Direct Wages |
31,500 |
|
|
Electricity |
15,000 |
|
|
Insurance |
5,000 |
|
|
Purchase of Raw Materials |
120,000 |
|
|
Factory Maintenance |
12,567 |
|
|
Provision for unrealized profit |
15,447 |
|
|
Raw Material at Dec 31,2019 |
30,000 |
|
|
Sales |
361,480 |
|
|
Salaries (Office Staff) |
45,668 |
|
|
Office Expenses |
3,480 |
|
|
Current Accounts at Dec 31, 2019: |
||
|
Mendez |
5,516 |
|
|
Marshall |
4,844 |
|
|
Capital Accounts: |
||
|
Mendez |
86,000 |
|
|
Marshall |
50,000 |
|
|
Drawings: |
||
|
Mendez |
16,000 |
|
|
Marshall |
22,000 |
|
|
Total |
610,907 |
610,907 |
Additional Information:
- Stock of finish goods at Dec 31, 2020 was valued at $109,360
- Stock of raw material at Dec 31, 2020 was valued at $25,000
- Work-in-progress at Dec 31, 2020 was valued at $19,200
- Factory profit is 20% on the cost of production.
- Office expenses owing $440
- Electricity prepaid is $3000
- The factory is responsible for 70% of the electricity, while the office is responsible for 60% of the insurance
- Provision for Depreciation: Motor Vehicle 20% of cost, Factory Equipment 10% on the
reducing balance method .. - Interest is to be charged on drawings is 5% per annum.
- Interest is allowed on capital accounts at the rate of 6% per annum.
- Marshall is allowed a salary of $15,000 per annum.
Required:
Prepare the partners’ manufacturing, trading, and
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