Obj. 4,5 • PR 1-5A Transactions; financial statements D'Lite Dry Cleaners is owned and operated by Joel Palk. A building and equipment are currently being rented, pending expansion to new facilities. The actual work of dry cleaning is done by another company at wholesale rates. The assets, liabilities, and common stock of the business on July 1, 20Y4, are as follows: Cash, $45,000; Accounts Receivable, $93,000; Supplies, $7,000; Land $75,000; Accounts Payable, $40,000; Common Stock, $60,000. Business transactions during July are summarized as follows: 3. Net income: $63,775 EMPLATE Joel Palk invested additional cash in exchange for common stock with a deposit of $35,000 in the business bank a. account. b. Paid $50,000 for the purchase of land adjacent to land currently owned by D'Lite Dry Cleaners as a future building site. Received cash from customers for dry cleaning revenue, $32,125. d. Paid rent for the month, $6,000. C. e. Purchased supplies on account, $2,500. f. Paid creditors on account, $22,800. g. Charged customers for dry cleaning revenue on account, $84,750. h. Received monthly invoice for dry cleaning expense for July (to be paid on August 10), $29,500. Paid the following: wages expense, $7,500; truck expense, $2,500; utilities expense, $1,300; miscellaneous expense, $2,700. j. Received cash from customers on account, $88,000. i. k. Determined that the cost of supplies on hand was $5,900; therefore, the cost of supplies used during the month was $3,600. 1. Paid dividends, $12,000. Instructions 1. Determine the amount of retained earnings as of July 1, 20Y4. 2. State the assets, liabilities, and stockholders' equity as of July 1 in equation form similar to that shown in this chapter. In tabular form below the equation, indicate increases and decreases resulting from each transaction and the new balances after each transaction. 3. Prepare an income statement for July, a statement of stockholders' equity for July, and a balance sheet as of July 31. 4. (Optional) Prepare a statement of cash flows for July.
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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