Transformers, Inc. prepared cash estimates for the 3rd quarter of 2022 (3-months). The following estimates were developed for certain items: July August September Cash sales P 60,000 P 80,000 P 150,000 Credit sales 30,000 60,000 90,000 Purchases 60,000 55,000 75,000 Payroll 40,000 50,000 60,000 Other expenses 20,000 25,000 30,000 In June, credit sales totaled P50,000 and purchases totaled P60,000. May credit sales were P70,000. Accounts receivable collections amount to 50% in the month after the sale and 40% in the second month after the sale; 10% of the receivables are never collected. Payroll and other expenses are paid in the month incurred. Sixty percent of the purchases are paid in the month incurred and the remainder is paid in the following month. A P20,000 tax payment is due on August 30. The cash balance was P60,000 on July 1 and the company maintain a minimum cash balance of P50,000. Any deficiency in cash can be withdrawn in a multiples of P10,000 from the credit line of the company from the bank at the beginning of the month cash is required and is paid at the end of the month when funds are available. Interest rate of the credit line is 12% p.a Required: 1. Prepare a cash budget for the 3-month period, July through September. Also add one column for the total of the quarter balance. 2. What is the balance of accounts receivable and accounts payable as of Sept. 30, 2022
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.
Transformers, Inc. prepared cash estimates for the 3rd quarter of 2022 (3-months). The following estimates were developed for certain items:
| July | August | September | |
| Cash sales | P 60,000 | P 80,000 | P 150,000 |
| Credit sales | 30,000 | 60,000 | 90,000 |
| Purchases | 60,000 | 55,000 | 75,000 |
| Payroll | 40,000 | 50,000 | 60,000 |
| Other expenses | 20,000 | 25,000 | 30,000 |
In June, credit sales totaled P50,000 and purchases totaled P60,000. May credit sales were P70,000.
Payroll and other expenses are paid in the month incurred. Sixty percent of the purchases are paid in the month incurred and the remainder is paid in the following month. A P20,000 tax payment is due on August 30. The cash balance was P60,000 on July 1 and the company maintain a minimum cash balance of P50,000. Any deficiency in cash can be withdrawn in a multiples of P10,000 from the credit line of the company from the bank at the beginning of the month cash is required and is paid at the end of the month when funds are available. Interest rate of the credit line is 12% p.a
Required:
1. Prepare a
2. What is the balance of accounts receivable and accounts payable as of Sept. 30, 2022
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