Question Hyun Bin opened his computer repair services shop on November 30, 2018. The following transactions happened during the operations of the business since the opening of the shop. The business uses a calendar accounting period. Dec 1 Hyun Bin deposited P500,000 to the account of the business as initial investment Dec 2 Purchased various computer repair equipment for P250,000, with down payment of P150,000 and the balance to be paid on terms. Dec 3 Bought office supplies for P25,000. Expense method is used. Dec 5 Billed various customers for services rendered, P80,000. Dec 8 Paid rent for three months at P15,000 per month. Asset method is used. Dec 10 Paid taxes and licenses, P8,000. Dec 14 Received partial payment of billing on December 5, P50,000. Dec 15 Paid half month salary of the staff receiving P36,000 on a monthly basis. Dec 18 Rendered services to various customers: Cash basis P90,000 and On account P70,000. Dec 20 Paid advertising expenses for 6 months, P42,000. Expense method is used. Dec 22 Withdrew P50,000 for personal use. Dec 25 Received a 12%, 30-day note from customers as payment of the account on December 5, P30,000. Dec 26 Received P25,000 for repair of 20 units of computer. Services will be provided on December 30, 2018. Income method is used. Dec 28 Paid the transportation of the staff, P4,000. Dec 31 Purchased office furniture on account, P120,000. Additional information: 1. The computer repair equipment and office furniture has estimated useful life of 5 years with out residual value. 2. Office supplies on hand per physical count, P3,000 3. Salaries of staff for the remaining half– month of December still unpaid. 4. Doubtful accounts is 5% of outstanding accounts receivable. 5. Unearned service income balance is 12,000. Required: 1.Prepare an Income Statement 2 Prepare a Balance Sheet
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.
Hyun Bin opened his computer repair services shop on November 30, 2018. The following transactions happened during the operations of the business since the opening of the shop. The business uses a calendar accounting period.
Dec 1 Hyun Bin deposited P500,000 to the account of the business as initial investment
Dec 2 Purchased various computer repair equipment for P250,000, with down payment of P150,000 and the balance to be paid on terms.
Dec 3 Bought office supplies for P25,000. Expense method is used.
Dec 5 Billed various customers for services rendered, P80,000.
Dec 8 Paid rent for three months at P15,000 per month. Asset method is used.
Dec 10 Paid taxes and licenses, P8,000.
Dec 14 Received partial payment of billing on December 5, P50,000.
Dec 15 Paid half month salary of the staff receiving P36,000 on a monthly basis.
Dec 18 Rendered services to various customers: Cash basis P90,000 and On
account P70,000.
Dec 20 Paid advertising expenses for 6 months, P42,000. Expense method is used.
Dec 22 Withdrew P50,000 for personal use.
Dec 25 Received a 12%, 30-day note from customers as payment of the account on December
5, P30,000.
Dec 26 Received P25,000 for repair of 20 units of computer. Services will be provided on December 30, 2018. Income method is used.
Dec 28 Paid the transportation of the staff, P4,000.
Dec 31 Purchased office furniture on account, P120,000.
Additional information:
1. The computer repair equipment and office furniture has estimated useful life of 5 years with out residual value.
2. Office supplies on hand per physical count, P3,000
3. Salaries of staff for the remaining half– month of December still unpaid.
4. Doubtful accounts is 5% of outstanding accounts receivable.
5. Unearned service income balance is 12,000.
Required:
1.Prepare an Income Statement
2 Prepare a Balance Sheet
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