On January 1 of the current year, the assets and liabilities of Chol James, aa Public Health consultant are as follows: Cash $1,500, Accounts receivable/ Debtors $4,800, Supplies $1,275, land $15,000 and Accounts Payable / Creditors $2,295. Chol James’ Public Health consultancy is a proprietorship owned and operated by Chol James. Currently, office space and office equipment are being rented. Pending the construction of an office complex on land purchased last year. Business transactions during January are summarized as follows: Received cash from clients for services $5892. Paid creditors on account $1582.5 Received cash from Chol James as an additional investment $5,550. Paid office rent for the month $1800. Charged clients for legal services on account $3,037.5. Received cash from clients on account $4,500. Purchased office supplies on account $367.5. Received invoice for community health promotion from Save the Children for January (to be paid on Feb 10th). $2,452.5. Paid the following: wages expense $1,275, promotion service expense $375, utilities expense $487.5, and miscellaneous expense $112.5. Determined that cost of office supplies on hand was $1,470; therefore the cost of supplies used during the month was $172.5. James withdrew $1,500 in cash from the business for personal use. Requirements: Determine the amount of Owners equity (Chol James, capital) as of January 1 of the current year. State the assets, liabilities, and Owners equity as of January 1 in equation form and indicate the increases and decreases. Journalize the transactions a to k. Prepare an income statement for January, a statement of owner’s equity for January and a balance sheet as at January 31st.
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 January 1 of the current year, the assets and liabilities of Chol James, aa Public Health consultant are as follows: Cash $1,500, Accounts receivable/ Debtors $4,800, Supplies $1,275, land $15,000 and Accounts Payable / Creditors $2,295.
Chol James’ Public Health consultancy is a proprietorship owned and operated by Chol James. Currently, office space and office equipment are being rented. Pending the construction of an office complex on land purchased last year. Business transactions during January are summarized as follows:
Received cash from clients for services $5892.
Paid creditors on account $1582.5
Received cash from Chol James as an additional investment $5,550.
Paid office rent for the month $1800.
Charged clients for legal services on account $3,037.5.
Received cash from clients on account $4,500.
Purchased office supplies on account $367.5.
Received invoice for community health promotion from Save the Children for January (to be paid on Feb 10th). $2,452.5.
Paid the following: wages expense $1,275, promotion service expense $375, utilities expense $487.5, and miscellaneous expense $112.5.
Determined that cost of office supplies on hand was $1,470; therefore the cost of supplies used during the month was $172.5.
James withdrew $1,500 in cash from the business for personal use.
Requirements:
Determine the amount of Owners equity (Chol James, capital) as of January 1 of the current year.
State the assets, liabilities, and Owners equity as of January 1 in equation form and indicate the increases and decreases.
Journalize the transactions a to k.
Prepare an income statement for January, a statement of owner’s equity for January and a balance sheet as at January 31st.
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