One February 1, A&D opened for business. Prepare an income statement for the month of February and a balance sheet as of February 28. 2021, taking account of the following transactions and adding new account titles as necessary. Do not forget to include in your balance sheet those transactions that occurred in January. (Note: Journal entries are required in part 2. In order to prepare the balance sheet, you need to compute the beginning and ending debit balance or credit balance of each account for assets, liabilities, and shareholders' equity. However, to save your time, you do not have to present them in the T-account format. An example is given below:) Cash Beginning debit balance 103,000 Ending debit bolance = 103000+5200+1200-7000-6000+800 = 97,200 1. (a) During the month of February, A&D perform repair service of $8,200 for its customers. Customers paid A&D $5.200 in cash for these services and charge $3,000 to accounts that A&D allows them to open. (b) By the end of February, customers have paid $1,200 of the amounts they have charged and $1,800 in charges are outstanding. 2. A&D paid Adam and David each a salary of $3,500 for the month of February. 3. A&D paid the balance of $6,000 it owes to X Corp. 4. Z LLC paid off the $800 note it gave to A&D.
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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