For the past several years, Angela Smith operated a part-time consulting business from her home. As of September 1, 2020, Angela decided to move to rented quarters and to operate the business on a full-time basis. She has registered the business as Interactive Consulting Ltd but has no prior knowledge of accounting and has approached a member of your group for advice. The company entered the following transactions during September: Date Particulars Debit ($) Credit ($) 09-Jan Cash $7,050 Supplies $1,250 Office Equipment $7,200 Accounts Receivables $1,500 To Capital Stock $17,000 (Being Capital introduced) 09-Feb Prepaid Rent $3,600.00 To Cash $3,600.00 (Being rent paid in advance) 09-Mar Prepaid Insurance $1,500.00 To Cash $1,500.00 (Being insurance paid in advance) 09-Apr Cash $3,500.00 To Unearned Fees $3,500.00 (Being fees received in advance) 09-May Office Equipment $1,800.00 To Accounts Payable $1,800.00 (Being equipment purchased on credit) 09-Jun Cash $800.00 To Accounts Receivables $800.00 (Being cash received from debtors) 09-Oct Advertisement Expense $120.00 To Cash $120.00 (Being advertisement expenses incurred) 09-Dec Accounts Payable $800.00 To Cash $800.00 (Being creditors paid off) 09-Dec Accounts Receivable $1,200.00 To Fees Earned $1,200.00 (Being fees due for services rendered) Sep-13 Salary Expenses $400.00 To Cash $400.00 (Being salary paid) Sep-17 Cash $2,100.00 To Accounts Receivable $2,100.00 (Being cash received from debtors) Sep-18 Supplies $750.00 To Cash $750.00 (Being supplies bought in cash) Sep-20 Accounts Receivable $1,100.00 To Fees Earned $1,100.00 (Being fees due for services rendered) Sep-24 Cash $1,850.00 To Fees Earned $1,850.00 (Being Fees received in cash) Sep-25 Cash $1,300.00 To Accounts Receivable $1,300.00 (Being amount received from debtors) Sep-27 Salary Expense $400.00 To Cash $400.00 (Being salary paid) Sep-29 Utilities Expenses $1,300.00 To Cash $1,300.00 (Being Utility expenses paid) Sep-30 Utilities Expenses $200.00 To Cash $200.00 (Being Utility expenses paid) Sep-30 Cash $1,050.00 To Accounts Receivable $1,050.00 (Being amount received from debtors) Sep-30 Accounts Receivable $500.00 To Fees Earned $500.00 (Being fees due for services rendered) 1. Prepare a trial balance based on the balances derived of the respective ledger accounts
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.
For the past several years, Angela Smith operated a part-time consulting business from her home. As of September 1, 2020, Angela decided to move to rented quarters and to operate the business on a full-time basis. She has registered the business as Interactive Consulting Ltd but has no prior knowledge of accounting and has approached a member of your group for advice. The company entered the following transactions during September:
|
Date |
Particulars |
Debit ($) |
Credit ($) |
|
09-Jan |
Cash |
$7,050 |
|
|
|
Supplies |
$1,250 |
|
|
|
Office Equipment |
$7,200 |
|
|
|
Accounts Receivables |
$1,500 |
|
|
|
To Capital Stock |
|
$17,000 |
|
|
(Being Capital introduced) |
|
|
|
09-Feb |
Prepaid Rent |
$3,600.00 |
|
|
|
To Cash |
|
$3,600.00 |
|
|
(Being rent paid in advance) |
|
|
|
09-Mar |
Prepaid Insurance |
$1,500.00 |
|
|
|
To Cash |
|
$1,500.00 |
|
|
(Being insurance paid in advance) |
|
|
|
09-Apr |
Cash |
$3,500.00 |
|
|
|
To Unearned Fees |
|
$3,500.00 |
|
|
(Being fees received in advance) |
|
|
|
09-May |
Office Equipment |
$1,800.00 |
|
|
|
To Accounts Payable |
|
$1,800.00 |
|
|
(Being equipment purchased on credit) |
|
|
|
09-Jun |
Cash |
$800.00 |
|
|
|
To Accounts Receivables |
|
$800.00 |
|
|
(Being cash received from debtors) |
|
|
|
09-Oct |
Advertisement Expense |
$120.00 |
|
|
|
To Cash |
|
$120.00 |
|
|
(Being advertisement expenses incurred) |
|
|
|
09-Dec |
Accounts Payable |
$800.00 |
|
|
|
To Cash |
|
$800.00 |
|
|
(Being creditors paid off) |
|
|
|
09-Dec |
Accounts Receivable |
$1,200.00 |
|
|
|
To Fees Earned |
|
$1,200.00 |
|
|
(Being fees due for services rendered) |
|
|
|
Sep-13 |
Salary Expenses |
$400.00 |
|
|
|
To Cash |
|
$400.00 |
|
|
(Being salary paid) |
|
|
|
Sep-17 |
Cash |
$2,100.00 |
|
|
|
To Accounts Receivable |
|
$2,100.00 |
|
|
(Being cash received from debtors) |
|
|
|
Sep-18 |
Supplies |
$750.00 |
|
|
|
To Cash |
|
$750.00 |
|
|
(Being supplies bought in cash) |
|
|
|
Sep-20 |
Accounts Receivable |
$1,100.00 |
|
|
|
To Fees Earned |
|
$1,100.00 |
|
|
(Being fees due for services rendered) |
|
|
|
Sep-24 |
Cash |
$1,850.00 |
|
|
|
To Fees Earned |
|
$1,850.00 |
|
|
(Being Fees received in cash) |
|
|
|
Sep-25 |
Cash |
$1,300.00 |
|
|
|
To Accounts Receivable |
|
$1,300.00 |
|
|
(Being amount received from debtors) |
|
|
|
Sep-27 |
Salary Expense |
$400.00 |
|
|
|
To Cash |
|
$400.00 |
|
|
(Being salary paid) |
|
|
|
Sep-29 |
Utilities Expenses |
$1,300.00 |
|
|
|
To Cash |
|
$1,300.00 |
|
|
(Being Utility expenses paid) |
|
|
|
Sep-30 |
Utilities Expenses |
$200.00 |
|
|
|
To Cash |
|
$200.00 |
|
|
(Being Utility expenses paid) |
|
|
|
Sep-30 |
Cash |
$1,050.00 |
|
|
|
To Accounts Receivable |
|
$1,050.00 |
|
|
(Being amount received from debtors) |
|
|
|
Sep-30 |
Accounts Receivable |
$500.00 |
|
|
|
To Fees Earned |
|
$500.00 |
|
|
(Being fees due for services rendered) |
|
|
1. Prepare a
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