Q2. The following trial balance has been extracted from the ledger of Mrs. Akughan, a sole trader. Trial balance as at 31st December, 2012 Dr Cr Ghc Ghc Sales 138,078 Purchases 82,350 Carriage 5,144 Drawings 7,800 Rent, rates and insurance 6,622 Postage and stationery 3,001 Advertising 1,330 Salaries and wages 26,420 Bad debts 877 Allowance for doubtful debts 130 Accounts receivables 12,120 Accounts payables 6,471 Cash in hand 177 Cash at bank 1,002 Inventory as at 1st January, 2012 11,927 Equipment at cost 58,000 Accumulated depreciation 19,000 Capital 53,091 216,770 216,770 Additional information as at 31st December, 2012: a) Rent is accrued by Ghc 210 b) Rates have been prepaid by Ghc 880 c) Ghc 2,211 of carriage represent carriage inwards on purchases d) Equipment is to be depreciated by 15% per annum using the straight-line method e) The allowance for doubtful debts is to be increase by Ghc 40 f) Inventory at close of business has been valued at Ghc 13,551 Required: Prepare an income statement for the year ending 31st December, 2012 and a statement of financial position as at that date.
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.
Q2. The following
Trial balance as at 31st December, 2012
Dr Cr
Ghc Ghc
Sales 138,078
Purchases 82,350
Carriage 5,144
Drawings 7,800
Rent, rates and insurance 6,622
Postage and stationery 3,001
Advertising 1,330
Salaries and wages 26,420
Allowance for doubtful debts 130
Accounts receivables 12,120
Accounts payables 6,471
Cash in hand 177
Cash at bank 1,002
Inventory as at 1st January, 2012 11,927
Equipment at cost 58,000
Capital 53,091
216,770 216,770
Additional information as at 31st December, 2012:
- a) Rent is accrued by Ghc 210
- b) Rates have been prepaid by Ghc 880
- c) Ghc 2,211 of carriage represent carriage inwards on purchases
- d) Equipment is to be depreciated by 15% per annum using the straight-line method
- e) The allowance for doubtful debts is to be increase by Ghc 40
- f) Inventory at close of business has been valued at Ghc 13,551
Required:
Prepare an income statement for the year ending 31st December, 2012 and a
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