Potato Head Traders makes use of the perpetual inventory system and marks up all its goods at cost plus 25% The business is a registered VAT vendor and trades only with other registered vendors. All amounts include VAT, where applicable, or otherwise stated. Record the following transactions in the January 2018 cashbook receipts provided in your answer booklet. Total only the "Bank" column of the cashbook receipts. Cash was banked on the 7 and 25 of January 2018. Limit Source Transaction Document REC123 The owner, Solly Mashy made an additional capital contribution of RS0 000, in cash. The amount was directly deposited into the businesses' bank account. CRR127 Cash sales of inventory, with a cost price of R12 000 excluding VAT. The long-term tenants (Chip-n-Dip) paid their monthly rental of R9 120. They rent business premises from Potato Head Traders. REC124 Sold trading stock (inventory) to Mr H. Burger with a selling price of R13 680, cash. Issued a cash invoice CV163. As Mr Burger is a regular dient a trade discount of 2.5% was also given to him. The R13 680 includes VAT, but is before taking the 2.5% discount into 12 CV163 account. One of the debtors Pot-8-0-Bake settled his account of R45 000 in full by cheque. Potato Head has a fixed deposit with B Bank. Interest is earned at 9%% per annum. The balance of the investment was R100 000. Interest of R750 is credited to the current bank account monthly. 25 REC125 30 B/S
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.
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