p. On April 5, Timothy established an interior decorating business, Tim's Design, with a cash investment of P200,000. Timothy completed the following transactions for April: 6. Paid rent for the month, PS,000. Purchased from Delta Co Office equipment, P55,000, using his credit card. Purchased a used car for P180,000, paying PS0,000 cash and taking a bank loan For the remainder. Purchased supplies and materials for cash, P11.315. Received cash from Miss Laura for a job completed in her condo, P57,500. Supplies were used amounting to PS,250. 10 12 20 Purchased materials and supplies on credit, P15,000 23 Recorded job completed for Mr. Ferrer. Tem: on account 10 days, P14,950. Supplies were used up amounting to P3,500. Received an invoice for repairs on the car and paid P4,500. 24 25 Paid utilities expense, P1,750. Paid P20,000 on the bank loan. Received cash from Mr. Ferrer, P10,000. Paid Salary of worker, P5,000. 26 27 28 29 Paid Delta a portion of the amount owed for equipment, P5,000. 30 Withdrew cash for personal use, P3,500. Required: a. Record each transaction in a joumal. Refer to the following chart of accounts in selecting the accounts to be debited and credited. 11 Cash 31 Timothy, Capital 12 Accounts Receivable 32 Timothy, Drawing Service Fees Eamed Salaries Expense 53 13 Supplies Prepaid Insurance Equipment Truck 41 14 51 16 Rent Expense 54 18 Repairs Expense 55 21 Supplies Expense Bank Bank Loan Payable Accounts Payable 22 59 Utilities Expense
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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