Prepare the adjusting entries for the end of the month (dated January 31) based on the given merchandise transactions below: Jan. 5 Purchased the following merchandise from Rebis Co.: • 300 reams of bond paper (P300 list price per ream) • 500 pieces of ballpen (P5 list price per piece) • 100 pieces of standard calculator (P400 list price per piece) Payment terms: Trade discount on total cost of 10%, cash discount of 2/10, n/30. Jan. 6 Paid freight costs on January 5 purchase, P1,000. Jan. 7 Contract signing with her assistant, with an average salary rate of P300/day. Jan. 9 Returned 5 pieces of standard calculator to Rebis Co. due to product defects. Credit memo made by Rebis were received that day. Jan. 15 Issued a 10% simple interest note payable to Bank of P.I. to finance the January 5 purchase made, which is to be paid on February 4, 2020. The amount received is equal to the balance to be paid to Rebis Co. (Note: see transactions related to Rebis Co. to determine the cash to be received, since the purpose of this note payable financing is to avail the cash discount). Jan. 15 Paid Rebis Co. in full, using the cash obtained from issuing note payable Jan. 29 Paid her assistant for 12 days of work Adjustments: a. Accrual of salary for 2 days of work. b. Accrual of interest on note payable. (Use actual number of days over 360 days per year to determine the amount of interest and round off your final answer to the nearest whole number.)
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.
Prepare the
Jan. 5 Purchased the following merchandise from Rebis Co.:
• 300 reams of bond paper (P300 list price per ream)
• 500 pieces of ballpen (P5 list price per piece)
• 100 pieces of standard calculator (P400 list price per piece)
Payment terms: Trade discount on total cost of 10%, cash discount of 2/10, n/30.
Jan. 6 Paid freight costs on January 5 purchase, P1,000.
Jan. 7 Contract signing with her assistant, with an average salary rate of P300/day.
Jan. 9 Returned 5 pieces of standard calculator to Rebis Co. due to product defects. Credit memo made by Rebis were received that day.
Jan. 15 Issued a 10% simple interest note payable to Bank of P.I. to finance the January 5 purchase made, which is to be paid on February 4, 2020. The amount received is equal to the balance to be paid to Rebis Co. (Note: see transactions related to Rebis Co. to determine the cash to be received, since the purpose of this note payable financing is to avail the cash discount).
Jan. 15 Paid Rebis Co. in full, using the cash obtained from issuing note payable
Jan. 29 Paid her assistant for 12 days of work
Adjustments:
a. Accrual of salary for 2 days of work.
b. Accrual of interest on note payable. (Use actual number of days over 360 days per year to determine the amount of interest and round off your final answer to the nearest whole number.)
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