Below are four scenarios for a local Midas Muffler shop for the month of December.Scenario 1: On December 1, the balance of maintenance supplies totals $400. On December 15, the shop purchases an additional $200 of maintenance supplies with cash. By the end of December, only $100 of maintenance supplies remain.Scenario 2: On December 4, Midas receives $6,000 cash from a local moving company inan agreement to provide truck maintenance of $1,000 each month for the next six months, beginning in December.Scenario 3: Mechanics have worked the final four days in December, earning $600, but have not yet been paid. Midas plans to pay its mechanics on January 2.Scenario 4: Customers receiving $250 of maintenance services from Midas on December 29 have not been billed as of the end of the month. These customers will be billed on January 3 and are expected to pay the full amount owed on January 6.Required:For each of the scenarios:1. Indicate the type of adjusting entry needed.2. Record the transaction described and the December 31 adjusting entry.
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.
Below are four scenarios for a local Midas Muffler shop for the month of December.
Scenario 1: On December 1, the balance of maintenance supplies totals $400. On December 15, the shop purchases an additional $200 of maintenance supplies with cash. By the end of December, only $100 of maintenance supplies remain.
Scenario 2: On December 4, Midas receives $6,000 cash from a local moving company in
an agreement to provide truck maintenance of $1,000 each month for the next six months, beginning in December.
Scenario 3: Mechanics have worked the final four days in December, earning $600, but have not yet been paid. Midas plans to pay its mechanics on January 2.
Scenario 4: Customers receiving $250 of maintenance services from Midas on December 29 have not been billed as of the end of the month. These customers will be billed on January 3 and are expected to pay the full amount owed on January 6.
Required:
For each of the scenarios:
1. Indicate the type of
2. Record the transaction described and the December 31 adjusting entry.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
