Problem 2 - Below is the transaction of Starla Company. For the first month of operation, transactions occurred during the start of its operation in October of the current year: Invested cash P 150,000 and Office Equipment- P10,00o into the business Purchased on account merchandise, P60,000 terms 2/15, n/30 FOB Shipping point. Purchased office supplies P500 on the account. Sold goods for cash P 90,000; Returned defective merchandise, P1,000. Sold goods on account, P50,000 to customers with credit terms: 2/15, EOM FOB Destinati Paid the freight charges on transaction made on Oct.3, P200 Paid half the purchases made on Oct. 3, Discount was allowed Made additional purchases for cash, P35,000. Borrowed from the bank P 200,000 and issued a 5-year promissory note. Paid salaries to employees - P 3,000. Refunded P300 to customers. Sold merchandise for P 55,000. FOB Destination terms 2/15, EOM Paid the freight charges on Oct. 10 and 17 - P700. Collected half from customers on account on Oct. 10. The discount was not allowed Sold Merchandise, P 75,000 FOB destination terms 2/10, n/30 Owner got P 5,000 from the business. Paid the following: salaries P3,000., Rent - P 1,000; Utilities- P1500, Advertising - P6c Merchandise inventory at the end amounts to P 8,000. 1 3 4 6. 10 10 11 12 14 15 16 17 20 20 26 27 28 31
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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