The unadjusted trial balance of Lakbay Tours as of December 31, 2018 is shown below: Ted Solomon, the owner, made an additional investment of P100,000 on March 1, 2018. On December 31, 2018, the following data were accumulated for use in making the adjusting entries: The company received an 18% P16,000 note from a key customer dated November 16, 2018. The prepaid rent has a beginning balance of P54,000 representing payment made for six month’s rent. During 2018, another two rent payments were made: P20,000 on June 30 and P19,000 on December 30. It is the policy of the lessor that rental be paid in advance for six months. The company bought all of its equipment on January 1, 2016. The equipment has an estimated total residual value of P12,000. The company uses the straight-line method of depreciation. Hint: Determine the annual depreciation based on the total accumulated depreciation and the acquisition date. Salaries earned by casual employees but unpaid and unrecorded amounted to P4,000. P800 unused office supplies remain on hand. 3% percentage tax due on December is based on gross quarterly receipts of P103,000. The company received tour revenues in advance on December 1 of which 80% has been earned. Solomon decided to write-off P15,000 accounts receivable which has been outstanding for two years and the client cannot be contacted anymore. Other accounts that will be used are as follows: 104 Interest Receivable 602 Bad Debt Expense 307 Salaries Payable 603 Depreciation Expense – Office Equipment 605 Rent Expense 604 Office Supplies Expense Required: Using the T account balances, prepare an adjusted trial balance.
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 unadjusted
Ted Solomon, the owner, made an additional investment of P100,000 on March 1, 2018. On December 31, 2018, the following data were accumulated for use in making the
- The company received an 18% P16,000 note from a key customer dated November 16, 2018.
- The prepaid rent has a beginning balance of P54,000 representing payment made for six month’s rent. During 2018, another two rent payments were made: P20,000 on June 30 and P19,000 on December 30. It is the policy of the lessor that rental be paid in advance for six months.
- The company bought all of its equipment on January 1, 2016. The equipment has an estimated total residual value of P12,000. The company uses the straight-line method of
depreciation . Hint: Determine the annual depreciation based on the totalaccumulated depreciation and the
acquisition date. - Salaries earned by casual employees but unpaid and unrecorded amounted to P4,000.
- P800 unused office supplies remain on hand.
- 3% percentage tax due on December is based on gross quarterly receipts of P103,000.
- The company received tour revenues in advance on December 1 of which 80% has been earned.
- Solomon decided to write-off P15,000 accounts receivable which has been outstanding for two years and the client cannot be contacted anymore.
Other accounts that will be used are as follows:
104 Interest Receivable 602
307 Salaries Payable 603 Depreciation Expense – Office Equipment 605 Rent Expense 604 Office Supplies Expense
Required:
Using the T account balances, prepare an adjusted trial balance.
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