The trial balance for Amy Enterprise for the year ended 31 December 2019 is as follows: Amy Enterprise Trial balance as at 31 December 2019 Account Debit (RM) Credit (RM) Cash 4,200 Accounts receivable 20,000 Notes receivable 10,000 Inventory 24,000 Prepaid rental 2,400 Equipment 18,000 Accumulated depreciation – equipment 4,000 Accounts payable 26,400 Capital, Amy 33,200 Sales 176,000 Cost of goods sold 92,000 Wages expenses 40,000 Miscellaneous expenses 24,000 Income tax 5,000 Total 239,600 239,600 Additional information: Accrued interest on notes receivable is RM1,000. Depreciation on the equipment is RM2,000. Accrued wages is RM1,200. Accrued utilities is RM800 (charged to miscellaneous account). Rental which is due is RM1,000. Cash drawings by Amy is RM2,800. Cash of RM400 is received from a customer for a debt which was wrongly credited to the trade payables. Instructions: Prepare adjusting journal entries for transactions (a)-(g). Prepare the adjusted trial balance as at 31 December 2019. Prepare the income statement and statement of changes in equity for the year ended 31 December 2019.
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
|
Amy Enterprise Trial balance as at 31 December 2019 |
||
|
Account |
Debit (RM) |
Credit (RM) |
|
Cash |
4,200 |
|
|
|
20,000 |
|
|
Notes receivable |
10,000 |
|
|
Inventory |
24,000 |
|
|
Prepaid rental |
2,400 |
|
|
Equipment |
18,000 |
|
|
|
|
4,000 |
|
Accounts payable |
|
26,400 |
|
Capital, Amy |
|
33,200 |
|
Sales |
|
176,000 |
|
Cost of goods sold |
92,000 |
|
|
Wages expenses |
40,000 |
|
|
Miscellaneous expenses |
24,000 |
|
|
Income tax |
5,000 |
|
|
Total |
239,600 |
239,600 |
Additional information:
- Accrued interest on notes receivable is RM1,000.
- Depreciation on the equipment is RM2,000.
- Accrued wages is RM1,200.
- Accrued utilities is RM800 (charged to miscellaneous account).
- Rental which is due is RM1,000.
- Cash drawings by Amy is RM2,800.
- Cash of RM400 is received from a customer for a debt which was wrongly credited to the trade payables.
Instructions:
- Prepare
adjusting journal entries for transactions (a)-(g). - Prepare the adjusted trial balance as at 31 December 2019.
- Prepare the income statement and statement of changes in equity for the year ended 31 December 2019.
- Prepare the balance sheet as at 31 December 2019.
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