Problem 3 Third Eye Transaction Analysis and Trial Balance Nick Danger opened a forensic accounting practice, (Nick Danger, Third Eye, Inc.), on June 1. The following accounts will be needed to record the business's transactions for June: Cash; Accounts Receivable; Office Supplies; Forensic Accounting Library; Office Furniture and Fixtures; Accounts Payable; Notes Payable; Common Stock; Dividends; Service Revenue; Rent Expense; Salaries Expense; Advertising Expense; Utilities Expense; and Interest Expense. The following transactions occurred in June: Danger opened a business checking account at a local bank, investing $22,000 in his practice in exchange for common stock. Purchased office furniture and fixtures for $9,800, paid $4,800 cash, and gave a note payable for the balance. Purchased books and software for a forensic accounting library on account, $6,700. Purchased office supplies for cash, $390. Paid rent for June, $850. Returned $300 of the forensic accounting books with defective bindings. The return reduced the amount owed to the supplier. 7. Billed clients for professional services rendered, $18,600. 1. 2. 3. 4. 5. 6. 8. Paid $1,700 on account for the library items purchased on June 3. 9. Collected $17,250 on account from clients billed on June 7. 10. Paid June salaries, $4,900. 11. Received an invoice for June advertising, to be paid in July, $400. 12. The business paid stockholders a cash dividend of $800. 13. Paid utilities for June, $210. 14. Paid interest for June on an outstanding note payable, $160. Required a. Prepare journal entries and record the above transactions in T-accounts, and key entries with the numbers of the transactions. b. Prepare a trial balance from the general ledger as of June 30.
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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