Problem 2-2A (Algo) Preparing and posting journal entries; preparing a trial balance LO A1, P1 Aracel Engineering completed the following transactions in the month of June. a. J. Aracel, the owner, invested $215,000 cash, office equipment with a value of $5,100, and $73,000 of drafting equipment to launch the company. b. The company purchased land worth $53,000 for an office by paying $10,000 cash and signing a note payable for $43,000. c. The company purchased a portable building with $58,000 cash and moved it onto the land acquired in b. d. The company paid $4,000 cash for the premium on an 18-month insurance policy. e. The company provided services to a client and collected $8,000 cash. f. The company purchased $32,000 of additional drafting equipment by paying $11,700 cash and signing a note payable for $20,300. g. The company completed $17,500 of services for a client. This amount is to be received in 30 days. h. The company purchased $1,050 of additional office equipment on credit. i. The company completed $28,000 of services for a customer on credit. j. The company purchased $1,426 of TV advertising on credit. k. The company collected $10,000 cash in partial payment from the client described in transaction g. 1. The company paid $2,200 cash for employee wages. m. The company paid $1,050 cash to settle the account payable created in transaction h. n. The company paid $1,200 cash for repairs. o. J. Aracel withdrew $9,630 cash from the company for personal use. p. The company paid $1,900 cash for employee wages. q. The company paid $3,600 cash for advertisements on the Web during June. Required: 1. Prepare general journal entries to record these transactions using the following titles: Cash (101); Accounts Receivable (106); Prepaid Insurance (108): Office Equipment (163);: Drafting Equipment (164); Building (170): Land (172); Accounts Payable (201); Notes Payable (250); J. Aracel, Capital (301): J. Aracel, Withdrawals (302); Services Revenue (403); Wages Expense (601): Advertising Expense (603): and Repairs Expense (604). 2. Post the journal entries from part 1 to the ledger accounts. 3. Prepare a trial balance as of the end of June.
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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