Lars Linken opened Pina Colada Cleaners on March 1, 2022. During March, the following transactions were completed. Mar. 1 Issued 9,000 shares of common stock for $13,500 cash. 1 Borrowed $5,600 cash by signing a 6-month, 6%, $5,600 note payable. Interest will be paid the first day of each subsequent month. 1 Purchased used truck for $7,700 cash. 2 Paid $1,680 cash to cover rent from March 1 through May 31. 3 Paid $2,580 cash on a 6-month insurance policy effective March 1. 6 Purchased cleaning supplies for $2,200 on account. 14 Billed customers $4,000 for cleaning services performed. 18 Paid $600 on amount owed on cleaning supplies. 20 Paid $1,900 cash for employee salaries. 21 Collected $1,700 cash from customers billed on March 14. 28 Billed customers $4,600 for cleaning services performed. 31 Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense). 31 Declared and paid a $800 cash dividend. The chart of accounts for Pina Colada Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Common Stock, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense. Journalize the March transaction
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.
| Mar. 1 | Issued 9,000 shares of common stock for $13,500 cash. | ||
| 1 | Borrowed $5,600 cash by signing a 6-month, 6%, $5,600 note payable. Interest will be paid the first day of each subsequent month. | ||
| 1 | Purchased used truck for $7,700 cash. | ||
| 2 | Paid $1,680 cash to cover rent from March 1 through May 31. | ||
| 3 | Paid $2,580 cash on a 6-month insurance policy effective March 1. | ||
| 6 | Purchased cleaning supplies for $2,200 on account. | ||
| 14 | Billed customers $4,000 for cleaning services performed. | ||
| 18 | Paid $600 on amount owed on cleaning supplies. | ||
| 20 | Paid $1,900 cash for employee salaries. | ||
| 21 | Collected $1,700 cash from customers billed on March 14. | ||
| 28 | Billed customers $4,600 for cleaning services performed. | ||
| 31 | Paid $350 for gas and oil used in truck during month (use Maintenance and Repairs Expense). | ||
| 31 | Declared and paid a $800 cash dividend. |
The chart of accounts for Pina Colada Cleaners contains the following accounts: Cash,
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