Jim’s Cleaning Services prepares financial statements at the end of each month. The following information is in relation to the month of July. 1. On 1 July, rent of $3,600 for the 6-month period ending 31 December is paid. 2. A 1-year insurance policy is purchased on 1 July for $1,560. 3. On 10 July, the Cross Hotel paid the business $2,800 in advance for doing their cleaning for the next 3 months. 30% of the cleaning work has been provided in the month of July. 4. The cleaning supplies of $2,340 was purchased on 15 July. The supplies account had a $260 debit balance on 1 July and $220 of supplies are on hand as at 31 July. 5. The business has two part-time employees who each earn $190 per day. They were both worked 16 days in the month. They were paid for the 14 days on 28 July, but not for the last 2 days for which they have worked after 28 July. Required: a) Record the above transactions occurred in the month of July in the general journal. b) Prepare the necessary adjusting entries at the end of the month of July. Need proper working notes
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.
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