QUESTION 2 ABS Ltd has an accounting system where all separate ledger accounts are maintained for each individual customer and supplier. The management wishes to draft the related control accounts. The following information is available. GH¢ 2,600,000 4,100,000 23,350,000 14,360,000 550,000 Receivables as on December 31 2018 Payables as on December 31 2018 Cheques issued to suppliers in settlement of GH¢23,600,000 Cash sales memos issued Goods returned to suppliers Cheques received from receivables in settlement of GH¢32,000,000 Cheques received from suppliers against return of goods Credit sales invoices issued Returns by customers from cash sales Returns by customers from credit sales Goods purchased on credit Cash refund to a debtor who had paid the amount due twice Cheque issued by a debtor on December 28 2018 was dishonored on May 13 2019 Increase in allowance for doubtful debts (from GH¢1,750,000 to GH¢2,250,000) 31,650,000 180,000 35,900,000 320,000 980,000 27,700,000 120,000 200,000 500,000 430,000 1,660,000 75,000 350,000 Bad debts written off Contra settlement between payables and receivables accounts Credit balance included in customers' accounts as on December 31 2019 A supplier's invoice received on December 30 2019 relating to goods supplied on December 28 2019 has not been entered in the books REQUIRED Prepare the receivables and payables control accounts from the above information for the year ended December 31 2019.
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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