Rich Man Realty Richard Manuel decided to open a business named Rich Man Realty. In September 2015 the following transactions took place. September 2015 1 - Mr. Manuel opened a real estate office by investing P 30,000. 2 - Paid insurance premium for one year, P 9,000. 5- Purchased miscellaneous office supplies from National Bookstore on credit, P 3,500. 7 - Purchased on credit tables and chairs from Joey and Sons Co., P 22,000. 10 - Received P 8,000 as commission from the sale of property. 12 - Sent a bill to a real estate developer for service rendered, P 35,000. 14 - Received a bill from Liz Printers for advertising materials used, P 2,500. 15- Paid salary of office clerks for the first half of the month, P 11,000. 18 Received a check from a real estate developer, P 15,000, as partial payment. 21 - Paid National Bookstore the full amount owed for office supplies bought on Sep 5. 24 The real estate developer issued a promissory note to settle its account, P 26- The owner withdrew cash from the business for personal use, P 4,000. 28 Made additional cash investment in the business, P 15,000. 30 Paid utilities amounting to P 4,150, and the salaries for the 2nd half of the month. CHART OF ACCOUNTS Acct # Account Title 101 Cash 105 Accounts Receivable 110 Notes Receivable 115 Office Supplies 120 Furniture 201 Accounts Payable 301 R. Manuel, Capital 302 R. Manuel, Drawings 401 Service Fees 403 Commission Income 501 Salaries Expense 505 Insurance Expense 510 Advertising Expense 520 Utilities Expense
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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