On January 1, 2018 the balance of Tanali Traders stood as follows: Cash in hand Rs. 2,000; Cash at bank Rs. 12,300; Stock in trade Rs. 51,700; Furniture Rs. 8,200; Debtors Rs. 6,600 (Shyam Rs. 3,500, Shanker Rs. 2,600, Laxman Rs. 500); Creditors Rs. 7,100 (Reddy & Co. Rs. 3,020, Kishore Rs. 4,080); Capital Rs. 73,700. Their transactions during the month of January were as follows: 2018 Jan. 1 Borrowed from Globe Finance Co 10,000 “ 2 Bought goods for cash 2,300 “ 2 Purchased from Reddy & Co 5,500 “ 3 Paid into bank 9,000 “ 5 Received cheque from Shyam 3,500 “ 6 Sold goods for cash 1,200 “ 7 Sold to Shanker 8,700 “ 8 Paid Kishore by cheque 2,000 Discount received 100 “ 9 Received cheque from Shanker on account 5,000 “ 9 Received credit note from Reddy & Co. for goods returned to them 380 “ 10 Sold goods to Thomas 10,000 “ 10 Drew cash from the bank 1,000 “ 12 Purchased postage stamps 300 “ 14 Bought of Bose & Sons 9,300 “ 16 Paid Globe Finance & Co. by cheque in part payment of loan 5,000 “ 17 Received cash from Laxman 500 “ 21 Paid Reddy & Co. by cheque 6,000 “ 23 Carriage paid 100 “ 24 Withdrew cash for private expenses 1,500 “ 28 Paid salaries in cash 800 “ 30 Rent due to landlord 500 “ 31 Purchased furniture on credit from Joseph 600 “ 31 Paid interest to Globe Finance Co. 100 Enter the above transactions in the appropriate books, post them into ledger and prepare a Trial Balance. (Answer: Cash in hand Rs. 600, Cash at bank Rs. 15,800, Trial Balance Total Rs. 1,13,600.)
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.
On January 1, 2018 the balance of Tanali Traders stood as follows:
Cash in hand Rs. 2,000; Cash at bank Rs. 12,300; Stock in trade Rs. 51,700; Furniture Rs. 8,200; Debtors Rs. 6,600 (Shyam Rs. 3,500, Shanker Rs. 2,600, Laxman Rs. 500); Creditors Rs. 7,100 (Reddy & Co. Rs. 3,020, Kishore Rs. 4,080); Capital Rs. 73,700.
Their transactions during the month of January were as follows:
2018
Jan. 1 Borrowed from Globe Finance Co 10,000
“ 2 Bought goods for cash 2,300
“ 2 Purchased from Reddy & Co 5,500
“ 3 Paid into bank 9,000
“ 5 Received cheque from Shyam 3,500
“ 6 Sold goods for cash 1,200
“ 7 Sold to Shanker 8,700
“ 8 Paid Kishore by cheque 2,000 Discount received 100
“ 9 Received cheque from Shanker on account 5,000
“ 9 Received credit note from Reddy & Co. for goods returned to them 380
“ 10 Sold goods to Thomas 10,000
“ 10 Drew cash from the bank 1,000
“ 12 Purchased postage stamps 300
“ 14 Bought of Bose & Sons 9,300
“ 16 Paid Globe Finance & Co. by cheque in part payment of loan 5,000
“ 17 Received cash from Laxman 500
“ 21 Paid Reddy & Co. by cheque 6,000
“ 23 Carriage paid 100
“ 24 Withdrew cash for private expenses 1,500
“ 28 Paid salaries in cash 800
“ 30 Rent due to landlord 500
“ 31 Purchased furniture on credit from Joseph 600
“ 31 Paid interest to Globe Finance Co. 100
Enter the above transactions in the appropriate books, post them into ledger and prepare a
(Answer: Cash in hand Rs. 600, Cash at bank Rs. 15,800, Trial Balance Total Rs. 1,13,600.)
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