On January 1, 2018, the general ledger of Big Blast Fireworks includes the following account balances: Accounts Credit Cash Accounts Receivable Inventory Land Allowance for Uncollectible Accounts Accounts Payable Notes Payable (9%, due in 3 years) Common Stock Retained Earnings Totals Debit $ 25,100 44,500 46,000 85,600 3,500 27,200 46,000 72,000 52,500 $ 201,200 $ 201,200 The $46,000 beginning balance of inventory consists of 460 units, each costing $100. During January 2018, Big Blast Fireworks had the following inventory transactions: January 3 Purchase 1,450 units for $158,050 on account ($109 each). January 8 Purchase 1,550 units for $176,700 on account ($114 each). January 12 Purchase 1,650 units for $196,350 on account ($119 each). January 15 January 19 Return 180 of the units purchased on January 12 because of defects. Sell 4,800 units on account for $720,000. The cost of the units sold is determined using a FIFO perpetual inventory system. Receive $705,000 from customers on accounts receivable. January 22 January 24 January 27 Pay $500,000 to inventory suppliers on accounts payable. Write off accounts receivable as uncollectible, $2,500. January 31 Pay cash for salaries during January, $135,000. The following information is available on January 31, 2018. a. At the end of January, the company estimates that the remaining units of inventory are expected to sell in February for only $100 each. b. At the end of January, $5,600 of accounts receivable are past due, and the company estimates that 35% of these accounts will not be collected. Of the remaining accounts receivable, the company estimates that 5% will not be collected. c. Accrued interest expense on notes payable for January. Interest is expected to be paid each December 31. d. Accrued income taxes at the end of January are $13,900.
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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