Prepare a journal entry for each transaction. Post the transaction to T-account.
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.
The Naseeb Company began operations on August 1, 2018. The following transactions occur during the month of August.
Aug-1 Owners invest $50,000 cash in the corporation in exchange for 5,000 shares of common
stock.
Aug-1 On the first day of August, $6,000 rent on a building is paid for the months of August
and September.
Aug-1 $30,000 is borrowed from a local bank, and a note payable is signed.
Aug-3 Equipment is purchased for $20,000 cash.
Aug-5 Naseeb Inc purchases, for $35,000 on account, an estimated 6-month supplies from Hero Supply.
Aug-16 $20,000 cash is loaned to another company, evidenced by a note receivable.
Aug-20 Company Receives $30,000 in cash and bills Kinley company $15,000 for services of
$45,000 performed in month of August.
Aug-25 $8,000 is collected on account from customers.
Aug-26 $20,000 is paid on account to Hero supply.
Aug-31 Salaries of $7,000 are paid to employees for August.
Aug-31 A bill for $2,000 is received from the local utility company for the month of August.
Aug-31 The Corporation pays its shareholders a cash dividend of $1,000.
Required:
- Prepare a
journal entry for each transaction. - Post the transaction to T-account.
- Prepare and post any necessary
adjusting entries at August 31, 2018 as per following information. - The note payable requires the entire $30,000 in principal plus interest at 10% to be paid on July 31, 2019. The date of the loan is August 1, 2018.
Depreciation on the equipment for the month of August is $500.- The note receivable is dated August 16, 2018. The note requires the entire $20,000 in
principal plus interest at 12% to be repaid in four months (the loan was outstanding for
half month of the August).
- The prepaid rent of $6,000 represents rent for the months of August and September.
- Supplies on hand total $30,000.
- Prepare an adjusted
trial balance as of August 31, 2016. - Prepare an Income Statement and
statement of Financial Position .
Record and
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