Question 3 You were recently employed as the Financial Controller at Covid Free Ltd. You were provided with the following information on April 1, 2018: Balance on April 1, 2020 Debtors control Dr. $65, 145 Debtors control Cr. 600 Creditors control Dr. 950 Creditors control Cr. 75, 500 Totals for the month of April 2020 Cash purchases 35, 600 Credit purchases 62, 600 Cash Sales 47, 000 Credit Sales 75, 000 Contra entry: Set off 1, 800 Refund to cash customers 2, 800 Bad debt written off 3, 300 Discount Allowed 3, 750 Total payments to suppliers 87, 000 Total receipt from customers 98, 800 Discount received 5, 500 Dishonoured cheques: customers 2, 900 Increase in the allowance for bad debts 2, 100 Return Inwards 2, 400 Return Outwards 15, 200 Balances at 30 April 2020 Debtors control: Dr. ? Cr: $8 300 Creditors control: Dr. $7 500 Cr: ? Required: A. Prepare the Sales ledger control account B. Prepare the Purchases control account
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.
Question 3
You were recently employed as the Financial Controller at Covid Free Ltd. You were provided
with the following information on April 1, 2018:
Balance on April 1, 2020
Debtors control Dr. $65, 145
Debtors control Cr. 600
Creditors control Dr. 950
Creditors control Cr. 75, 500
Totals for the month of April 2020
Cash purchases 35, 600
Credit purchases 62, 600
Cash Sales 47, 000
Credit Sales 75, 000
Contra entry: Set off 1, 800
Refund to cash customers 2, 800
Bad debt written off 3, 300
Discount Allowed 3, 750
Total payments to suppliers 87, 000
Total receipt from customers 98, 800
Discount received 5, 500
Dishonoured cheques: customers 2, 900
Increase in the allowance for
Return Inwards 2, 400
Return Outwards 15, 200
Balances at 30 April 2020
Debtors control: Dr. ? Cr: $8 300
Creditors control: Dr. $7 500 Cr: ?
Required:
A. Prepare the Sales ledger control account
B. Prepare the Purchases control account
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