On November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs.During the month, Kris completed the following transactions related to the business:Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchangefor common stock, $36,000.1. Paid rent for period of November 1 to end of month, $4,000.6. Purchased office equipment on account, $16,000.8. Purchased a truck for $43,000 paying $4,300 cash and giving a note payable for the remainder.10. Purchased supplies for cash, $1,860.12. Received cash for job completed, $8,000.15. Paid annual premiums on property and casualty insurance, $2,400.23. Recorded jobs completed on account and sent invoices to customers, $15,500.24. Received an invoice for truck expenses, to be paid in November, $1,250.Enter the following transactions on Page 2 of the two-column journal:29. Paid utilities expense, $3,660.29. Paid miscellaneous expenses, $1,700.30. Received cash from customers on account, $10,500.30. Paid wages of employees, $4,750.30. Paid creditor a portion of the amount owed for equipment purchased on November 6, $4,000.30. Paid dividends, $1,600.Instructions1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insertthe account numbers in the journal at this time.) Explanations may be omitted.11 Cash 31 Common Stock12 Accounts Receivable 33 Dividends13 Supplies 41 Fees Earned14 Prepaid Insurance 51 Wages Expense16 Equipment 53 Rent Expense18 Truck 54 Utilities Expense21 Notes Payable 55 Truck Expense22 Accounts Payable 59 Miscellaneous Expense2. Post the journal to a ledger of four-column accounts, inserting appropriate posting referencesas each item is posted. Extend the balances to the appropriate balance columns after eachtransaction is posted.3. Prepare an unadjusted trial balance for Modern Designs as of November 30, 2018.4. Determine the excess of revenues over expenses for November.5. Can you think of any reason why the amount determined in (4) might not be thenet income for November?
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 November 1, 2018, Kris Lehman established an interior decorating business, Modern Designs.
During the month, Kris completed the following transactions related to the business:
Nov. 1. Kris transferred cash from a personal bank account to an account to be used for the business in exchange
for common stock, $36,000.
1. Paid rent for period of November 1 to end of month, $4,000.
6. Purchased office equipment on account, $16,000.
8. Purchased a truck for $43,000 paying $4,300 cash and giving a note payable for the remainder.
10. Purchased supplies for cash, $1,860.
12. Received cash for job completed, $8,000.
15. Paid annual premiums on property and casualty insurance, $2,400.
23. Recorded jobs completed on account and sent invoices to customers, $15,500.
24. Received an invoice for truck expenses, to be paid in November, $1,250.
Enter the following transactions on Page 2 of the two-column journal:
29. Paid utilities expense, $3,660.
29. Paid miscellaneous expenses, $1,700.
30. Received cash from customers on account, $10,500.
30. Paid wages of employees, $4,750.
30. Paid creditor a portion of the amount owed for equipment purchased on November 6, $4,000.
30. Paid dividends, $1,600.
Instructions
1. Journalize each transaction in a two-column journal beginning on Page 1, referring to the following chart of accounts in selecting the accounts to be debited and credited. (Do not insert
the account numbers in the journal at this time.) Explanations may be omitted.
11 Cash 31 Common Stock
12 Accounts Receivable 33 Dividends
13 Supplies 41 Fees Earned
14 Prepaid Insurance 51 Wages Expense
16 Equipment 53 Rent Expense
18 Truck 54 Utilities Expense
21 Notes Payable 55 Truck Expense
22 Accounts Payable 59 Miscellaneous Expense
2. Post the journal to a ledger of four-column accounts, inserting appropriate posting references
as each item is posted. Extend the balances to the appropriate balance columns after each
transaction is posted.
3. Prepare an unadjusted
4. Determine the excess of revenues over expenses for November.
5. Can you think of any reason why the amount determined in (4) might not be the
net income for November?
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