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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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- Comprehensive The following are Farrell Corporations balance sheets as of December 31, 2019, and 2018, and the statement of income and retained earnings for the year ended December 31, 2019: Additional information: a. On January 2, 2019, Farrell sold equipment costing 45,000, with a book value of 24,000, for 19,000 cash. b. On April 2, 2019, Farrell issued 1,000 shares of common stock for 23,000 cash. c. On May 14, 2019, Farrell sold all of its treasury stock for 25,000 cash. d. On June 1, 2019, Farrell paid 50,000 to retire bonds with a face value (and book value) of 50,000. e. On July 2, 2019, Farrell purchased equipment for 63,000 cash. f. On December 31, 2019. land with a fair market value of 150,000 was purchased through the issuance of a long-term note in the amount of 150,000. The note bears interest at the rate of 15% and is due on December 31, 2021. g. Deferred taxes payable represent temporary differences relating to the use of accelerated depreciation methods for income tax reporting and the straight-line method for financial statement reporting. Required: 1. Prepare a spreadsheet to support a statement of cash flows for Farrell for the year ended December 31, 2019, based on the preceding information. 2. Prepare the statement of cash flows.The controller of Red Lake Corporation has requested assistance in determining income, basic earnings per share, and diluted earnings per share for presentation on the companys income statement for the year ended September 30, 2020. As currently calculated, Red Lakes net income is 540,000 for fiscal year 2019-2020. Your working papers disclose the following opening balances and transactions in the companys capital stock accounts during the year: 1. Common stock (at October 1, 2019, stated value 10, authorized 300,000 shares; effective December 1, 2019, stated value 5, authorized 600,000 shares): Balance, October 1, 2019issued and outstanding 60,000 shares December 1, 201960,000 shares issued in a 2-for-l stock split December 1, 2019280,000 shares (stated value 5) issued at 39 per share 2. Treasury stockcommon: March 3, 2020purchased 40,000 shares at 38 per share April 1, 2020sold 40,000 shares at 40 per share 3. Noncompensatory stock purchase warrants, Series A (initially, each warrant was exchangeable with 60 for 1 common share; effective December 1, 2019, each warrant became exchangeable for 2 common shares at 30 per share): October 1, 201925,000 warrants issued at 6 each 4. Noncompensatory stock purchase warrants, Series B (each warrant is exchangeable with 40 for 1 common share): April 1, 202020,000 warrants authorized and issued at 10 each 5. First mortgage bonds, 5%, due 2029 (nonconvertible; priced to yield 5% when issued): Balance October 1, 2019authorized, issued, and outstandingthe face value of 1,400,000 6. Convertible debentures, 7%, due 2036 (initially, each 1,000 bond was convertible at any time until maturity into 20 common shares; effective December 1, 2019, the conversion rate became 40 shares for each bond): October 1, 2019authorized and issued at their face value (no premium or discount) of 2,400,000 The following table shows the average market prices for the companys securities during 2019-2020: Adjusted for stock split Required: Prepare a schedule computing: 1. the basic earnings per share 2. the diluted earnings per share that should be presented on Red Lakes income statement for the year ended September 30, 2020 A supporting schedule computing the numbers of shares to be used in these computations should also be prepared. Assume an income tax rate of 30%.Required information Skip to question [The following information applies to the questions displayed below.] On January 1, 2024, Red Flash Photography had the following balances: Cash, $24,000; Supplies, $9, 200; Land, $72,000; Deferred Revenue, $6,200; Common Stock $62,000; and Retained Earnings, $37,000. During 2024, the company had the following transactions: February 15 Issue additional shares of common stock, $32,000. May 20 Provide services to customers for cash, $47,000, and on account, $42,000. August 31 Pay salaries to employees for work in 2024, $35,000. October 1 Purchase rental space for one year, $24,000. November 17 Purchase supplies on account, $34,000. December 30 Pay dividends, $3,200. The following information is available on December 31, 2024: Employees are owed an additional $5,200 in salaries. Three months of the rental space have expired. Supplies of $6,200 remain on hand. All of the services associated with the beginning deferred revenue have been performed. 4.…
- On January 1, 2021, Red Flash Photography had the following balances: Cash, $26,000; Supplies, $9,400; Land, $74,000; Deferred Revenue, $6,400; Common Stock $64,000; and Retained Earnings, $39,000. During 2021, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $34,000. 2. Мay 3. August 4. Оctober 5. November 17 Purchase supplies on account, $36,000. 6. December 30 Pay dividends, $3,400. 20 Provide services to customers for cash, $49,000, and on account, $44,000. 31 Pay salaries to employees for work in 2021, $37,000. 1 Purchase rental space for one year, $26,000. The following information is available on December 31, 2021: 1. Employees are owed an additional $5,400 in salaries. 2. Three months of the rental space has expired. 3. Supplies of $6,400 remain on hand. 4. All of the services associated with the beginning deferred revenue have been performed.O Required information [The following information applies to the questions displayed below.] On January 1, 2024, Red Flash Photography had the following balances: Cash, $32,000; Supplies, $10,000; Land, $80,000; Deferred Revenue, $7,000; Common Stock $70,000; and Retained Earnings, $45,000. During 2024, the company had the following transactions: 1. February 15 Issue additional shares of common stock, $40,000. 2. May 20 3. August 31 4. October 1 Provide services to customers for cash, $55,000, and on account, $50,000. Pay salaries to employees for work in 2024, $43,000. Purchase rental space for one year, $32,000. Purchase supplies on account, $42,000. 5. November 17 6. December 30 Pay dividends, $4,000. The following information is available on December 31, 2024: 1. Employees are owed an additional $6,000 in salaries. 2. Three months of the rental space have expired. 3. Supplies of $7,000 remain on hand. All other supplies have been used. 4. All of the services associated with the…Smallville Company was organized on January 1, 2020. It is authorized to issue 109000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$58000, Merchandise Inventory- $75200, Prepaid Insurance-$4800, 10% Notes Payable-$25400, Equipment-$138000, Accumulated Depreciation: Equipment-$3800, Common Stock-$131000, Paid in capital in excess of par value: Common Stock-$24000, and Retained Earnings-$91800. The following transactions took place in Smallville Company during April of the current year (2020). April 1 - Issued 2500 new shares of common stock for $343000 April 3 - Purchased merchandise of $7600 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $250. April 4 - Sold merchandise for cash, $89100. The cost of the merchandise sold was $47000. April 5 - Purchased merchandise on account from Stafford Co., $23000,…
- Smallville Company was organized on January 1, 2020. It is authorized to issue 102000 shares of $120 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$58000, Merchandise Inventory- $75800, Prepaid Insurance-$4900, 10% Notes Payable-$25200, Equipment-$143000, Accumulated Depreciation: Equipment-$3700, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$24000, and Retained Earnings-$104800. The following transactions took place in Smallville Company during April of the current year (2020). April 1 - Issued $2500 new shares of common stock for $346000 April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $300. April 4 - Sold merchandise for cash, $83600. The cost of the merchandise sold was $48000. April 5 - Purchased merchandise on account from Stafford Co., $23000,…Smallville Company was organized on January 1, 2020. It is authorized to issue 114000 shares of $120 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$58000, Merchandise Inventory- $75500, Prepaid Insurance-$4900, 10% Notes Payable-$26000, Equipment-$138000, Accumulated Depreciation: Equipment-$3100, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$23000, and Retained Earnings-$100300. The following transactions took place in Smallville Company during April of the current year (2020).April 1 - Issued $2400 new shares of common stock for $335000 April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $260.April 4 - Sold merchandise for cash, $85700. The cost of the merchandise sold was $48000.April 5 - Purchased merchandise on account from Stafford Co., $21000,…The following information was taken from the accounting records of ATLANTA Company for the year ended December 31, 2021: Net income during the year, P2,250,000Proceeds from the issuance of preference shares, P4,000,000Dividends paid on preference shares, P400,000Bonds payable converted to ordinary shares, P2,000,000Payment for purchase of machinery, P500,000Proceeds from sale of plant building, P1,200,000Retirement of bonds payable at face value, P2,500,0002% bonus issue on ordinary shares, P300,000Purchase of ordinary treasury shares, P120,000Payment for the purchase of debt securities at amortized cost, P450,000Gain on sale of plant building, P200,000Depreciation expense, P188,000Doubtful accounts expense, P87,000Increase in accounts receivable, P325,000Decrease in merchandise inventory, P129,000Increase in investments in equity securities at FVTPL, P440,000Increase in accounts payable, P90,000Decrease in accrued expenses, P225,000Increase in income tax payable, P117,000 How much is…
- Smallville Company was organized on January 1, 2020. It is authorized to issue 104000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.Cash-$57000, Merchandise Inventory- $75600, Prepaid Insurance-$5100, 10% Notes Payable-$25000, Equipment-$135000, Accumulated Depreciation: Equipment-$3900, Common Stock-$124000, Paid in capital in excess of par value: Common Stock-$22000, and Retained Earnings-$97800.The following transactions took place in Smallville Company during April of the current year (2020).April 1 - Issued $2600 new shares of common stock for $339000April 3 - Purchased merchandise of $8000 on account from Prescott Co., terms FOB destination, 2/10, n/30. The appropriate party paid the freight charge of $280.April 4 - Sold merchandise for cash, $81500. The cost of the merchandise sold was $50000.April 5 - Purchased merchandise on account from Stafford Co., $23000, terms…Smallville Company was organized on January 1, 2020. It is authorized to issue 109000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts. Cash-$60000, Merchandise Inventory- $75500, Prepaid Insurance-$5000, 10% Notes Payable-$25600, Equipment-$137000, Accumulated Depreciation: Equipment-$3500, Common Stock-$130000, Paid in capital in excess of par value: Common Stock-$25000, and Retained Earnings-$93400.The following transactions took place in Smallville Company during April of the current year (2020).April 1 - Issued 2400 new shares of common stock for $336000April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 3/10, n/30. The appropriate party paid the freight charge of $290.April 4 - Sold merchandise for cash, $80400. The cost of the merchandise sold was $51000.April 5 - Purchased merchandise on account from Stafford Co., $23000,…Smallville Company was organized on January 1, 2020. It is authorized to issue 109000 shares of $110 par value common stock. At the beginning of April, the ledger of Smallville Company carried the following balances to their respective accounts.Cash-$60000, Merchandise Inventory- $75500, Prepaid Insurance-$5000, 10% Notes Payable-$25600, Equipment-$137000, Accumulated Depreciation: Equipment-$3500, Common Stock-$130000, Paid in capital in excess of par value: Common Stock-$25000, and Retained Earnings-$93400.The following transactions took place in Smallville Company during April of the current year (2020).April 1 - Issued 2400 new shares of common stock for $336000April 3 - Purchased merchandise of $7500 on account from Prescott Co., terms FOB destination, 3/10, n/30. The appropriate party paid the freight charge of $290.April 4 - Sold merchandise for cash, $80400. The cost of the merchandise sold was $51000.April 5 - Purchased merchandise on account from Stafford Co., $23000, terms…