Randy’s Restaurant Company (RRC) entered into the following transactions during arecent year.April 1 Purchased a new food locker for $5,000 by paying $1,000 cash and signing a$4,000 note due in six months.April 2 Installed an air-conditioning system in the food locker at a cost of $3,000, purchased on account.April 30 Wrote a check for the amount owed on account for the work completed on April 2.May 1 A local carpentry company repaired the restaurant’s front door, for which RRCwrote a check for the full $120 cost.June 1 Paid $9,120 cash for the rights to use the name and store concept created bya different restaurant that has been successful in the region. For the next fouryears, RRC will operate under the Mullet Restaurant name, with the slogan“business customers in the front, and partiers in the back.”Required:1. Analyze the accounting equation effects and record journal entries for each of thetransactions.2. For the tangible and intangible assets acquired in the preceding transactions, determine theamount of depreciation and amortization that Randy’s Restaurant Company should report forthe quarter ended June 30. For convenience, the food locker and air-conditioning system aredepreciated as a group using the straight-line method with a useful life of five years and noresidual value.3. Prepare a journal entry to record the depreciation calculated in requirement 2.
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.
Randy’s Restaurant Company (RRC) entered into the following transactions during a
recent year.
April 1 Purchased a new food locker for $5,000 by paying $1,000 cash and signing a
$4,000 note due in six months.
April 2 Installed an air-conditioning system in the food locker at a cost of $3,000, purchased on account.
April 30 Wrote a check for the amount owed on account for the work completed on April 2.
May 1 A local carpentry company repaired the restaurant’s front door, for which RRC
wrote a check for the full $120 cost.
June 1 Paid $9,120 cash for the rights to use the name and store concept created by
a different restaurant that has been successful in the region. For the next four
years, RRC will operate under the Mullet Restaurant name, with the slogan
“business customers in the front, and partiers in the back.”
Required:
1. Analyze the
transactions.
2. For the tangible and intangible assets acquired in the preceding transactions, determine the
amount of
the quarter ended June 30. For convenience, the food locker and air-conditioning system are
depreciated as a group using the straight-line method with a useful life of five years and no
residual value.
3. Prepare a
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