QUESTION 3 Johan Graphic Enterprise was established by Mr. Johan on 1 January 2021. At the end of the sixth month of its operation, the trial balance containing the relevant account balances is shown as follows: Johan Graphic Enterprise Trial Balance as at 30 June 2021 Debit (RM) Credit (RM). Cash 35,000 Furniture and equipment 40,000 Vehicle 220,000 Supplies 3,500 Prepaid Insurance 17,500 Note Payable 20,000 Unearned service revenue 15,000 Capital 100,000 Drawings 15,000 Service Revenue 233,900 Office general expense 2,500 Salaries and wages expense 20,000 Utility expense 2,100 Transportation expense 13,300 Total 368,900 368,900 The analysis shows there are the following six items that need to be adjusted for the six-month operation of the business: 1. As at 30 June, a total of RM750 of supplies has not been used. 2. Prepaid Insurance is an insurance policy for a period of one year, payable on 1 March 2021. 3. Unearned Service Revenue is an advance payment received on 30 April 2020. As at 30. June 2021, 70% of the services have been successfully completed. 4. The note payable was issued on 1 February 2021. It is a 6-month note with 9% interest rate. 5. Salaries and wages expense for five employees amounting to RM1,500 each for June 2021 has not yet been recorded. Payment of salaries to employees is usually made on the 5th of each month. 6. Depreciation expense for furniture and equipment is RM4,000 per annum while vehicles are depreciated at a rate of 10% per annum with a residual value of RM20,000. Required: a) Prepare the adjusting journal entries. Omit explanation. b) Prepare an Adjusted Trial Balance for Johan Graphic Enterprise as at 30 June 2021. c) Prepare an Income Statement for the six-month ended 30 June 2021. d) Prepare a Statement of Financial Position as at 30 June 2021. 5/5
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
