Please present the adjusting entry for December 31, 2018 and the reversing entry for January 1, 2019, based on the information below. (Each question is not related)
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.
Problem 3. Adjustments
Please present the
- In the
trial balance , you can see that the amount of Prepaid Advertising is IDR 12,000,000, which is the payment for 10 advertisements on Kompas. By the end of the year, 7 advertisements had appeared on Kompas. - Borrowed money from Bank Mandiri on October 1, and signed a draft amounting to Rp. 240,000,000, 6 months, 14%.
- The company has provided services to customers in the amount of Rp. 30,000,000 and will receive payment on January 5, 2020.
- Received draft from 16 November 2018 amounting to IDR 80,000,000, 14%, 120 days.
- Estimates that 2% of the receivables totaling Rp. 156,700,000 are uncollectible.
- The company received office rent of Rp 48,000,000 on November 1, 2018 for 1 year usage, recorded as Revenue.
- The company has 70 employees who are paid every Saturday. Salary IDR 110,000 per day per employee, Sunday is a holiday, December 31 is Thursday.
- The company purchased the equipment on October 1, 2018, at a cost of IDR 130,000,000, estimated useful life of 5 years, estimated residual value of IDR 10,000,000.
- The company received Rp. 45,000,000 from customers for services, and recorded it as a liability. At the end of the year it was known that the services that had been provided to customers were IDR 32,000,000.
- The balance of supplies expense in the trial balance is IDR 8,000,000. At the end of the year it was known that the unused supplies amounted to Rp 2,000,000.
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