Mary Maywood opened Maywood Cleaners on March 1, 2022. During March, the following transactions were completed. Mar.1 Shareholders invested €25,000 cash in the business in exchange for ordinary shares. Mar.1 Borrowed €7,000 cash by signing a 6-month, 8%, €7,000 note payable. Interest will be paid the first day of each subsequent month. Mar.1 Purchased used truck for €9,000 cash. Mar.2 Paid €2,500 cash to cover rent from March 1 through May 31. Mar.3 Paid €3,400 cash on a 6-month insurance policy effective March 1. Mar.6 Purchased cleaning supplies for €2,000 on account. Mar.14 Billed customers €4,700 for cleaning services performed. Mar.18 Paid €700 on amount owed on cleaning supplies. Mar.20 Paid €1,750 cash for employee salaries. Mar.21 Collected €1,800 cash from customers billed on March 14. Mar.28 Billed customers €4,500 for cleaning services performed. Mar.31 Paid €450 for gas and oil used in truck during month (use Maintenance and Repairs Expense). Mar.31 Declared and paid a €1000 cash dividend. The chart of accounts for Maywood Cleaners contains the following accounts: Cash, Accounts Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment, Accumulated Depreciation—Equipment, Accounts Payable, Salaries and Wages Payable, Notes Payable, Interest Payable, Share Capital—Ordinary, Retained Earnings, Dividends, Income Summary, Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense, Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense. Required: a. Journalize the March transactions. b. Post to the ledger accounts (Use T-accounts.) c. Prepare a trial balance at March 31. d. Journalize the following adjustments. 1. Services performed but unbilled and uncollected at March 31 were €500. 2. Depreciation on equipment for the month was €450. 3. One-sixth of the insurance expired. 4. An inventory count shows €390 of cleaning supplies on hand at March 31. 5. Accrued but unpaid employee salaries were €1,080. 6. One month of the prepaid rent has expired. 7. One month of interest expense related to the note payable has accrued and will be paid April 1. e. Post adjusting entries to the T-accounts. f. Prepare an adjusted trial balance. g. Prepare the income statement and a retained earnings statement for March and a classified statement of financial position at March 31. h. Journalize and post-closing entries and complete the closing process. i. Prepare a post-closing trial balance at March 31
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.
Mary Maywood opened Maywood Cleaners on March 1, 2022. During March, the following
transactions were completed.
Mar.1 Shareholders invested €25,000 cash in the business in exchange for ordinary shares.
Mar.1 Borrowed €7,000 cash by signing a 6-month, 8%, €7,000 note payable. Interest will be
paid the first day of each subsequent month.
Mar.1 Purchased used truck for €9,000 cash.
Mar.2 Paid €2,500 cash to cover rent from March 1 through May 31.
Mar.3 Paid €3,400 cash on a 6-month insurance policy effective March 1.
Mar.6 Purchased cleaning supplies for €2,000 on account.
Mar.14 Billed customers €4,700 for cleaning services performed.
Mar.18 Paid €700 on amount owed on cleaning supplies.
Mar.20 Paid €1,750 cash for employee salaries.
Mar.21 Collected €1,800 cash from customers billed on March 14.
Mar.28 Billed customers €4,500 for cleaning services performed.
Mar.31 Paid €450 for gas and oil used in truck during month (use Maintenance and Repairs
Expense).
Mar.31 Declared and paid a €1000 cash dividend.
The chart of accounts for Maywood Cleaners contains the following accounts: Cash, Accounts
Receivable, Supplies, Prepaid Insurance, Prepaid Rent, Equipment,
Depreciation
Interest Payable, Share Capital—Ordinary, Retained Earnings, Dividends, Income Summary,
Service Revenue, Maintenance and Repairs Expense, Supplies Expense, Depreciation Expense,
Insurance Expense, Salaries and Wages Expense, Rent Expense, and Interest Expense.
Required:
a. Journalize the March transactions.
b. Post to the ledger accounts (Use T-accounts.)
c. Prepare a
d. Journalize the following adjustments.
1. Services performed but unbilled and uncollected at March 31 were €500.
2. Depreciation on equipment for the month was €450.
3. One-sixth of the insurance expired.
4. An inventory count shows €390 of cleaning supplies on hand at March 31.
5. Accrued but unpaid employee salaries were €1,080.
6. One month of the prepaid rent has expired.
7. One month of interest expense related to the note payable has accrued and will be paid
April 1.
e. Post
f. Prepare an adjusted trial balance.
g. Prepare the income statement and a retained earnings statement for March and a classified
h. Journalize and
i. Prepare a post-closing trial balance at March 31
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