Mr. Lopez opened a mini grocery store with business name Lopez Fiesta Mart. Operations began on January 1, 2022, and the following transactions were completed during the month: 1 Mr. Lopez withdrew P150,000 from a personal savings account and used it to open a new account in the name of Lopez Fiesta M 2 Bought grocery supplies on account $10,700. Acquired a service vehicle costing P76,000. A payment of $25,000 Cash was made and a note payable given for the $51,000 remainder payable for 6 equal monthly installment. 6 Purchased merchandise from Puregold P49, 500, terms 5/10, 3/20. 4 7 Paid P1,500 delivery charge for January 6 transactions. 8 Paid for three months of advertising and recorded Prepaid Advertising in the amount of P6,000. 11 Sold merchandise on account P42,000 with 40% mark-up from the inventory cost of P30,000, term 2/10, n/30. 12 Paid P1,200 freight for January 11 transactions. 14 Returned defective merchandise to Puregold amounting to $4,500. 15 Paid salaries, P5,600. 16 Signed a promissory note for 30,000 loaned amount from Commonwealth Bank. 17 Received returned merchandise from customer P3,500. 18 Paid P5,700 of the amount owed from the transaction of January 2 19 Purchase additional groceries from Talavera Supermarket amounting to P44,000. 20 Collected full settlement of a customer from January 11 transactions. 24 Paid telephone expense, $1,600 25 Paid building rentals for the month, P4, 800. 26 Settled accounts to Puregold 27 P41,750 cost of merchandise sold for P58.450. 28 Withdrew #20 000 from the business 29 Paid miscellaneous expenses, P3.430. 30 Paid the first installment of the note payable on Service Vehicle, P8.500 31 Paid Salaries P5.100 net of the following deductions: SSS, 380, Pag-IBIG 100 Philhealth, 220 Inventory at the end of the month is P20,000
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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