Denzel Brooks opened a Web consulting business called Venture Consultants and completed the following transactions in March. larch 1 Brooks invested $200,000 cash along with $28,000 in office equipment in the company. 2 The company prepaid $7,500 cash for six months' rent for an office. Hint: Debit Prepaid Rent for $7,500. 3 The company made credit purchases of office equipment for $3,300 and office supplies for $1,200. Payment is due within 10 days. 6 The company completed services for a client and immediately received $5,000 cash. 9 The company completed a $8,800 project for a client, who must pay within 30 days. 12 The company paid $4,500 cash to settle the account payable created on March 3. 19 The company paid $5,300 cash for the premium on a 12-month insurance policy. Hint: Debit Prepaid Insurance for $5,300. 22 The company received $4,500 cash as partial payment for the work completed on March 9. 25 The company completed work for another client for $4,630 on credit. 29 Brooks withdrew $7,000 cash from the company for personal use. 30 The company purchased $1,400 of additional office supplies on credit. 31 The company paid $500 cash for this month's utility bill.
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.
JOURNAL ENTRIES :
| DATE | PARTICULAR | DEBIT | CREDIT |
| Mar 01 |
Cash Office Equipment To Common stock (To record cash and office equipment brought in for common stock) |
200,000 28,000 |
2,28,000 |
| Mar 02 |
Prepaid rent To cash (To record cash and office equipment brought in for common stock) |
7,500 | 7,500 |
| Mar 03 |
Office Equipment Office supplies To accounts payable (To record credit purchases) |
3,300 1,200 |
4,500 |
| Mar 06 |
Cash To service revenue ( To record cash received for services) |
5,000 | 5,000 |
| Mar 09 |
Accounts receivable To services revenue ( To record service revenue receivable ) |
9,300 | 9,300 |
| Mar 12 |
Accounts payable To cash ( To record payment against payable)
|
4,500 | 4,500 |
| Mar 19 |
Prepaid insurance To cash (To record .payment of prepaid insurance) |
5,300 | 5,300 |
| Mar 22 |
Cash To accounts receivable ( To record partial payment received against receivables) |
4,500 | 4,500 |
| Mar 25 |
Accounts receivable To Services revenue ( To record service revenue receivable ) |
4,638 | 4,638 |
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