Monica's Cleaning Service completed the following transactions during December 2022: Dec. Monica's Cleaning Service began operations by receiving $30,000 cash and 1 cleaning equipment with a fair value of $10,000 from Monica. The business issued Monica capital in exchange for this contribution. 1 Paid $1,200 cash for a six-month insurance policy. The policy begins December 1. 4 Paid $1,000 cash for supplies. Performed cleaning services for a customer and received $2,700 cash. Completed a large cleaning job, billed the customer, $3,300, and received a promise to collect the $3,300 within one week. 18 Paid employee salary, $8,800. 20 Received $6,500 cash for performing cleaning services. 22 Collected $1,800 in advance for cleaning service to be performed later. Collected $3,300 cash from customer on account. 25 12 15 27 Purchased soap for the cleaning equipment, paying $150 on account. (Debit Cleaning Expense) 28 Performed cleaning services on account, $2,900. 29 Paid office rent, $1,400, for the month of December. 30 Paid $150 on account. 31 Monica withdrew cash of $2,500. Requirements 1. Record each transaction in the journal using the following chart of accounts. Explanations are not required. Cash Accounts Receivable Supplies Prepaid Insurance Cleaning Equipment Accumulated Depreciation- Cleaning Equipment Accounts Payable Salaries Payable Unearned Revenue Monica, Capital Monica, Withdrawals Income Summary Service Revenue Salaries Expense Depreciation Expense Cleaning Equipment Insurance Expense Cleaning Expense Rent Expense Supplies Expense
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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