On December 1, 2020, Mark began an auto repair shop, Mark Automotive. The following information about December's transactions 1-Dec Mark contributed P500,000 cash to the business. 1-Dec Purchased P20,000 of equipment paying cash. 1-Dec Paid P4,500 for a 9-month insurance policy starting on December 1. 9- Dec Paid P180,000 cash to purchase land to be used in operations. 10- Dec Purchased office supplies on account, P3,000 19- Dec Borrowed P280,000 from the bank for business use. Mark signed a note payable to the bank in the name of the business. 22- Dec Paid P800 for advertising expenses. 26- Dec Paid P1,000 for office supplies purchased last Dec 10. 28- Dec The business received a bill for utilities to be paid in January, P280. 31- Dec Revenues earned during the month included P17,500 cash and P2,700 on account. 31-Dec Paid employees' salaries P3,600 and building rent P7,000. 31-Dec The business received P1,440 for auto screening services to be performed next month. 31-Dec Mark withdrew cash of P30,000 Requirements: Record the adjusting entries as of December 31, 2020. Additional information necessary for adjusting entries is below: a Office Supplies used during the month, P600. b Depreciation was recorded on the equipment using the straight-line method. Assume a useful life of 5 years and a salvage value of P2,000 c One month insurance has expired. d Accrued Interest Expense for Notes Payable last Dec 19, P750. Follow the format: Date Journal Entry and Explanation Debit Credit
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
