The following pre‐adjustment trial balance appeared in the books of Central Perk Furniture Store at the end of their financial year. IGNORE VAT. Pre‐adjustment trial balance of Central Perk Furniture Store for the year ended 31 March 2020. Fol. Debit (R) Credit (R) Statement of financial position section Capital B1 500 000.00 Drawings B2 25 000.00 Land and buildings B3 865 000.00 Vehicles B4 220 987.00 Equipment B5 156 760.00 Accumulated depreciation: Equipment (1 April 2019) B6 54 320.00 Accumulated Depreciation: Vehicles (1 April 2019) B7 22 580.00 Bank B8 22 430.00 Debtors Control B9 35 600.00 Allowance for Credit Losses‐ 1 April 2019 B10 1 780.25 Petty Cash B11 1 378.98 Trading inventory (1 April 2019) B12 27 865.43 Mortgage Loan B13 287 650.00 Creditors Control B14 31 420.00 SARS(UIF/SDL/PAYE) B15 23 290.65 Fol. Debit (R) Credit (R) Nominal accounts section Sales N1 1 167 371.07 Sales Returns N2 25 340.87 Purchases N3 520 389.76 Purchases returns N4 76 540.32 Service Income N5 10 987.45 Rent Income N6 63 200.00 Interest on debtors accounts N7 5 320.48 Credit losses recovered N8 2 478.90 Telephone and fax N9 17 430.22 Credit Losses N10 9 650.55 Office refreshments N11 6 540.76 Cleaning materials N12 5 340 98 Stationery N13 4 498.27 Railage Inwards N14 1 976.54 Insurance N15 50 600.00 Electricity N16 12 356.45 Interest on creditors Accounts N17 5 478.67 Advertising N18 26 754.23 Wages and Salaries N19 156 430.28 Entertainment N20 14 560.70 Fuel N21 34 569.43 2 246 939.12 2 246 939.12 Additional Information: 1. Provide for depreciation as follows: ‐ On motor vehicles: 15% per annum on reducing balance method. ‐ On equipment: 10% on cost. Note a new piece of equipment was purchased on 1 September 2019 costing R54 000. This has been recorded properly. 2. The owner took trading inventory for personal use. The selling price was R4 800 (VAT is not applicable). The mark up is 50% on cost price. The transaction has not been processed. The periodic inventory method is utilised by Central Perk Furniture Store. 3. The telephone and fax invoice for March 2020 of R2 430.15 has not yet been paid. 4. A debtor, C. Bing who owed R6 500 has been declared insolvent. The business received 35 cents on the Rand from the insolvent estate. This transaction must still be recorded. The remaining balance may be written off as irrecoverable. 5. The allowance for credit losses must be adjusted to the amount of R1 600. 6. Insurance expenses for April 2020 have been prepaid. The monthly premium has remained the same for the past two years. 7. Rent income for April 2020 of R4 200 has been received in advance. 8. Service income of R5 430 has not been received for March 2020. 9. The stock take revealed the following: ‐ Trading inventory – R15 640.32 ‐ Cleaning materials‐ R1 432.76 ‐ Stationery‐ R568.43 Required: Journalise the adjustments (First voucher number = No. 101). Note ‐ The subsidiary journals have been closed off, so all additional transactions are recorded in the general journal. No journal narrations or folio numbers are required. You are not required to journalise the closing transfers.
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.
The following pre‐adjustment
at the end of their financial year. IGNORE VAT.
Pre‐adjustment trial balance of Central Perk Furniture Store for the year ended 31 March 2020.
Fol. Debit (R) Credit (R)
Capital B1 500 000.00
Drawings B2 25 000.00
Land and buildings B3 865 000.00
Vehicles B4 220 987.00
Equipment B5 156 760.00
Accumulated
(1 April 2019)
B6 54 320.00
Accumulated Depreciation: Vehicles
(1 April 2019)
B7 22 580.00
Bank B8 22 430.00
Debtors Control B9 35 600.00
Allowance for Credit Losses‐ 1 April 2019 B10 1 780.25
Petty Cash B11 1 378.98
Trading inventory (1 April 2019) B12 27 865.43
Mortgage Loan B13 287 650.00
Creditors Control B14 31 420.00
SARS(UIF/SDL/PAYE) B15 23 290.65
Fol. Debit (R) Credit (R)
Nominal accounts section
Sales N1 1 167 371.07
Sales Returns N2 25 340.87
Purchases N3 520 389.76
Purchases returns N4 76 540.32
Service Income N5 10 987.45
Rent Income N6 63 200.00
Interest on debtors accounts N7 5 320.48
Credit losses recovered N8 2 478.90
Telephone and fax N9 17 430.22
Credit Losses N10 9 650.55
Office refreshments N11 6 540.76
Cleaning materials N12 5 340 98
Stationery N13 4 498.27
Railage Inwards N14 1 976.54
Insurance N15 50 600.00
Electricity N16 12 356.45
Interest on creditors Accounts N17 5 478.67
Advertising N18 26 754.23
Wages and Salaries N19 156 430.28
Entertainment N20 14 560.70
Fuel N21 34 569.43
2 246 939.12 2 246 939.12
Additional Information:
1. Provide for depreciation as follows:
‐ On motor vehicles: 15% per annum on
‐ On equipment: 10% on cost. Note a new piece of equipment was purchased on
1 September 2019 costing R54 000. This has been recorded properly.
2. The owner took trading inventory for personal use. The selling price was R4 800 (VAT is
not applicable). The mark up is 50% on cost price. The transaction has not been
processed. The periodic inventory method is utilised by Central Perk Furniture Store.
3. The telephone and fax invoice for March 2020 of R2 430.15 has not yet been paid.
4. A debtor, C. Bing who owed R6 500 has been declared insolvent. The business received
35 cents on the Rand from the insolvent estate. This transaction must still be recorded.
The remaining balance may be written off as irrecoverable.
5. The allowance for credit losses must be adjusted to the amount of R1 600.
6. Insurance expenses for April 2020 have been prepaid. The monthly premium has
remained the same for the past two years.
7. Rent income for April 2020 of R4 200 has been received in advance.
8. Service income of R5 430 has not been received for March 2020.
9. The stock take revealed the following:
‐ Trading inventory – R15 640.32
‐ Cleaning materials‐ R1 432.76
‐ Stationery‐ R568.43
Required:
Journalise the adjustments (First voucher number = No. 101).
Note ‐ The subsidiary journals have been closed off, so all additional transactions are recorded in the general journal. No journal narrations or folio numbers are required. You are not required to journalise the closing transfers.
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