ion below, prepare the following: 1. Closing Entries 2. Post-Closing Trial Balance 3. Reversing Entries
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.
| Based on the given information below, prepare the following: |
| 1. Closing Entries |
| 2. Post-Closing |
| 3. Reversing Entries |
| Happy Valley |
| Worksheet (Unadjusted to Adjusted TB omitted) |
| For the month ended March 31, 2021 |
| Statement of Income | |
|||
| Dr | Cr | Dr | Cr | |
| Cash on Hand | 87,904.00 | |||
| Cash in Bank | 2,114,640.00 | |||
| 35,000.00 | ||||
| Allowance for |
1,750.00 | |||
| Notes Receivable | 4,000.00 | |||
| Interest Receivable | 40.00 | |||
| Amusement Rides | 2,400,000.00 | |||
| 18,000.00 | ||||
| Electronic Equipment | 80,896.00 | |||
| Accumulated Depreciation - Electronic Equipment | 2,136.00 | |||
| Furniture and Fixtures | 24,000.00 | |||
| Accumulated Depreciation - Furniture and Fixtures | 360.00 | |||
| Accounts Payable | 15,400.00 | |||
| Notes Payable | 80,000.00 | |||
| Interest Payable | 1,600.00 | |||
| SS Premiums Payable | 2,880.00 | |||
| EC Premiums Payable | 64.00 | |||
| Philhealth Premiums Payable | 1,280.00 | |||
| Pag-Ibig Premiums Payable | 960.00 | |||
| Withholding Taxes Payable | 3,760.00 | |||
| Utilities Payable | 2,400.00 | |||
| Mortgage Payable | 400,000.00 | |||
| Masaya, Capital | 4,200,000.00 | |||
| Masaya, Drawing | 7,500.00 | |||
| Ticket Sales | 44,960.00 | |||
| Rental Income | 89,600.00 | |||
| Interest Income | 40.00 | |||
| Advertising Expense | 16,000.00 | |||
| Salaries Expense | 48,000.00 | |||
| EC Premium Expense | 64.00 | |||
| Pag-Ibig Premium Expense | 480.00 | |||
| Philhealth Premium Expense | 640.00 | |||
| SS Premium Expense | 1,920.00 | |||
| Rent Expense | 8,000.00 | |||
| Taxes and Licenses Expense | 1,460.00 | |||
| Utility Expense | 10,800.00 | |||
| Interest Expense | 1,600.00 | |||
| Bad Debts Expense | 1,750.00 | |||
| Depreciation Expense | 20,496.00 | |||
| Total | 111,210.00 | 134,600.00 | 4,753,980.00 | 4,730,590.00 |
| Net Income | 23,390.00 | 23,390.00 | ||
| Total | 134,600.00 | 134,600.00 | 4,753,980.00 | 4,753,980.00 |
| Additional Information: |
| This is the company's 1st month of operations. |
| The Notes Receivable is a 90-day note. |
| The Notes Payable is a 1-year note maturing March 18, 2021. It was issued to acquire the Electronic Equipment. |
| The Mortgage Payable matures on March 3, 2026. |
| The Furniture and Fixtures was acquired by paying cash of P8,600 and the balance on the account (Accounts Payable of P15,400) |
| Date | Particulars | f | Dr | Cr |
| Mar 31 | EC Premium Expense | 64.00 | ||
| SS Premium Expense | 480.00 | |||
| Philhealth Premium Expense | 640.00 | |||
| Pag-Ibis Premium Expense | 1,920.00 | |||
| EC Premiums Payable | 64.00 | |||
| SS Premiums Payable | 480.00 | |||
| Philhealth Premiums Payable | 640.00 | |||
| Pag-Ibig Premiums Payable | 1,920.00 | |||
| Accrual for employer's share on payroll taxes. | ||||
| Depreciation Expense | 20,496.00 | |||
| Accumulated Depreciation - Amusement Rides | 18,000.00 | |||
| Accumulated Depreciation - Electronic Equipment | 2,136.00 | |||
| Accumulated Depreciation - Furniture and Fixtures | 360.00 | |||
| Depreciation expense for the month. | ||||
| Bad Debts Expense | 1,750.00 | |||
| Allowance for Bad Debts | 1,750.00 | |||
| Bad Debts Expense for the month. | ||||
| Interest Expense | 1,600.00 | |||
| Interest Payable | 16,000.00 | |||
| Accrued interest on mortgage and notes Payable | ||||
| Interest Receivable | 40.00 | |||
| Interest Income | 40.00 | |||
| Accrued interest on Notes Receivable. | ||||
| Utilities Expense | 2,400.00 | |||
| Utilities Payable | 2,400.00 |
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