On April 1, Mary Henderson started Henderson Company. The company was organized as a corporation and has a monthly accounting period. The following transactions occurred during the company’s first month. Apr. 1 Mary Henderson invested $45,000 cash in the company in exchange for its common stock. Apr. 1 The company paid $25,000 cash for equipment. Apr. 1 The company paid $1,400 cash to rent office space for April. Apr. 1 The company paid $840 cash for the premium on a 12-month insurance policy. Coverage begins on April 1. Apr. 5 The company purchased $120 of supplies on account. Apr. 12 The company provided $1,575 in services to a customer. The customer must pay within 30 days. Apr. 14 The company paid $950 cash for employee salary. Apr. 25 The company provided services to a customer and immediately received $5,400 cash. Apr. 28 The company paid $950 cash for employee salary. Apr. 30 The company paid $475 cash in dividends. The company’s chart of accounts follows: CHART OF ACCOUNTS ASSETS DIVIDENDS Cash Dividends Accounts Receivable Supplies REVENUES Prepaid Insurance Service Revenue Equipment Accumulated Depreciation-Equipment EXPENSES Salaries Expense LIABILITIES Rent Expense Accounts Payable Supplies Expense Salaries Payable Insurance Expense Depreciation Expense-Equipment EQUITY Common Stock CLEARING Retained Earnings Income Summary Adjustment Information 1. Depreciation on the company’s equipment for April is $400. 2. As of April 30, the company has $72 of supplies remaining. 3. As of April 30, the company has incurred $190 of unpaid and unrecorded salary. 4. As of April 30, one month of insurance coverage has expired.
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.
On April 1, Mary Henderson started Henderson Company. The company was organized as a corporation
and has a monthly accounting period. The following transactions occurred during the company’s first
month.
Apr. 1 Mary Henderson invested $45,000 cash in the company in exchange for its common stock.
Apr. 1 The company paid $25,000 cash for equipment.
Apr. 1 The company paid $1,400 cash to rent office space for April.
Apr. 1 The company paid $840 cash for the premium on a 12-month insurance policy. Coverage
begins on April 1.
Apr. 5 The company purchased $120 of supplies on account.
Apr. 12 The company provided $1,575 in services to a customer. The customer must pay within 30
days.
Apr. 14 The company paid $950 cash for employee salary.
Apr. 25 The company provided services to a customer and immediately received $5,400 cash.
Apr. 28 The company paid $950 cash for employee salary.
Apr. 30 The company paid $475 cash in dividends.
The company’s chart of accounts follows:
CHART OF ACCOUNTS
ASSETS DIVIDENDS
Cash Dividends
Accounts Receivable
Supplies REVENUES
Prepaid Insurance Service Revenue
Equipment
Accumulated
Salaries Expense
LIABILITIES Rent Expense
Accounts Payable Supplies Expense
Salaries Payable Insurance Expense
Depreciation Expense-Equipment
EQUITY
Common Stock CLEARING
Retained Earnings Income Summary
Adjustment Information
1. Depreciation on the company’s equipment for April is $400.
2. As of April 30, the company has $72 of supplies remaining.
3. As of April 30, the company has incurred $190 of unpaid and unrecorded salary.
4. As of April 30, one month of insurance coverage has expired.
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