For the past several years, Kell Dice has operated a part-time consulting business from his home. As of June 1, 2020, Kell decided to move to rented quarters and to operate the business, which was to be known as Dice Consulting, on a full-time basis. Dice Consulting entered into the following transactions during June. Transactions: June: Kell Dice deposited $55,000 into Dice Consulting as the sole owner. Dice Consulting purchased supplies, $3,500; and office equipment, $17,500 with a 3 year note payable of $10,000 and the remainder in cash. Paid three months’ rent on a lease rental contract, $ 6,000. Paid the yearly premium on property and casualty insurance policies, $3,000. Paid cash for a newspaper advertisement, $120. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $7,000. Purchased additional office equipment on account from Office Equip Co., $3,500. Recorded services provided on account for the period June 1–14, $5,500. Kell took clients out for a meal to discuss business, $100 Paid Office Equip Co. for part of the debt incurred on June 4, $1,500. Paid cash for supplies, $1000. Paid part-time receptionist for two weeks’ salary, $500. Recorded cash from cash clients for services provided during the period June 1–16, $4,000. Received cash from clients on account, $2,500. Recorded services provided on account for the period June 15–22, $3,600. Recorded cash from cash clients for services provided for the period June 17–25, $2,400. Received the electricity bill for June, $300. (Will pay it later) Paid part-time receptionist for two weeks’ salary, $500. Paid water bill for June, $25. Recorded cash from cash clients for services provided for the period June 26–30, $2,500. Recorded services provided on account for the remainder of June, $1,500. Kell Dice withdrew $3,000 for personal use. Instructions Journalize each transaction in a two-column journal, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert the account numbers in the journal at this time.) 101 Cash 310 Kell Dice, Drawing 120 Accounts Receivable 320 Income Summary 122 Allowance for Doubtful Accounts 401 Fees Earned 124 Supplies 500 Bad Debt Expense 125 Prepaid Rent 501 Salary Expense 126 Prepaid Insurance 502 Rent Expense 150 Office Equipment 503 Supplies Expense 155 Accumulated Depreciation 504 Depreciation Expense 201 Accounts Payable 505 Insurance Expense 205 Note Payable 507 Interest Expense 210 Salaries Payable 509 Advertising Expense 220 Unearned Fees 512 Utilities Expense 301 Kell Dice, Capital 515 Meal Expense Post the journal to a ledger of four-column accounts. Prepare a trial balance as of June 30, 2020, listing all the accounts in the order given in the ledger. Journalize and post the adjusting entries. One month of Insurance has expired. Supplies on hand on June 30 are $1,500. Accrued receptionist salary on June 30 is $100. One month of rent was used. Unearned fees on June 30 are $3,000. $1,000 of fees needs to be accrued Calculate the interest for one month on the Note Payable using a 5% interest rate. (Use the Note Payable account and round to nearest whole number.) Depreciation of office equipment for June based on SL depreciation over 4 years. (Round to nearest whole number) Bad Debt is 1% of sales for the month of June. (Hint: Use the revenue balance after other adjusting entries have been completed) Prepare the adjusted trial balance.
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.
For the past several years, Kell Dice has operated a part-time consulting business from his home. As of June 1, 2020, Kell decided to move to rented quarters and to operate the business, which was to be known as Dice Consulting, on a full-time basis. Dice Consulting entered into the following transactions during June.
Transactions:
June:
- Kell Dice deposited $55,000 into Dice Consulting as the sole owner.
- Dice Consulting purchased supplies, $3,500; and office equipment, $17,500 with a 3 year note payable of $10,000 and the remainder in cash.
- Paid three months’ rent on a lease rental contract, $ 6,000.
- Paid the yearly premium on property and casualty insurance policies, $3,000.
- Paid cash for a newspaper advertisement, $120.
- Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $7,000.
- Purchased additional office equipment on account from Office Equip Co., $3,500.
- Recorded services provided on account for the period June 1–14, $5,500.
- Kell took clients out for a meal to discuss business, $100
- Paid Office Equip Co. for part of the debt incurred on June 4, $1,500.
- Paid cash for supplies, $1000.
- Paid part-time receptionist for two weeks’ salary, $500.
- Recorded cash from cash clients for services provided during the period June 1–16, $4,000.
- Received cash from clients on account, $2,500.
- Recorded services provided on account for the period June 15–22, $3,600.
- Recorded cash from cash clients for services provided for the period June 17–25, $2,400.
- Received the electricity bill for June, $300. (Will pay it later)
- Paid part-time receptionist for two weeks’ salary, $500.
- Paid water bill for June, $25.
- Recorded cash from cash clients for services provided for the period June 26–30, $2,500.
- Recorded services provided on account for the remainder of June, $1,500.
- Kell Dice withdrew $3,000 for personal use.
Instructions
- Journalize each transaction in a two-column journal, referring to the following
chart of accounts in selecting the accounts to be debited and credited. (Do not
insert the account numbers in the journal at this time.)
101 Cash 310 Kell Dice, Drawing
120
122 Allowance for Doubtful Accounts 401 Fees Earned
124 Supplies 500
125 Prepaid Rent 501 Salary Expense
126 Prepaid Insurance 502 Rent Expense
150 Office Equipment 503 Supplies Expense
155
201 Accounts Payable 505 Insurance Expense
205 Note Payable 507 Interest Expense
210 Salaries Payable 509 Advertising Expense
220 Unearned Fees 512 Utilities Expense
301 Kell Dice, Capital 515 Meal Expense
- Post the journal to a ledger of four-column accounts.
- Prepare a
trial balance as of June 30, 2020, listing all the accounts in the order given in the ledger. - Journalize and
post the adjusting entries. - One month of Insurance has expired.
- Supplies on hand on June 30 are $1,500.
- Accrued receptionist salary on June 30 is $100.
- One month of rent was used.
- Unearned fees on June 30 are $3,000.
- $1,000 of fees needs to be accrued
- Calculate the interest for one month on the Note Payable using a 5% interest rate. (Use the Note Payable account and round to nearest whole number.)
- Depreciation of office equipment for June based on SL depreciation over 4 years. (Round to nearest whole number)
- Bad Debt is 1% of sales for the month of June. (Hint: Use the revenue balance after other adjusting entries have been completed)
- Prepare the adjusted trial balance.
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