PSJ Electrical Trial Balance as at 31 December 2021 Sales Debit Credit 550000 Motor Van at cost 75000 Office Equipment 16800 Provision for Depreciation on Motor van 8400 Provision for Depreciation on office equipment 5400 Purchases 350380 Salaries and wages 36592
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.
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PSJ Electrical |
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Sales |
Debit |
Credit 550000 |
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Motor Van at cost |
75000 |
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Office Equipment |
16800 |
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Provision for Depreciation on Motor van |
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8400 |
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Provision for Depreciation on office equipment |
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5400 |
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Purchases |
350380 |
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Salaries and wages |
36592 |
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Stock: 31 January 2021 |
85700 |
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Returns Inwards |
13600 |
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Carriage Inwards |
6000 |
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2468 |
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Provision for bad debts |
1460 |
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General expenses |
1890 |
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Rent |
5130 |
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Insurance |
4900 |
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Motor expenses |
7880 |
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Creditors |
65000 |
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Debtors |
90644 |
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Cash at Bank |
1332 |
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Drawings: Patrick |
25300 |
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Smith |
16834 |
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Jones |
12432 |
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Current Accounts: Patrick |
2780 |
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Smith |
1230 |
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Jones |
5072 |
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Capital Accounts: Patrick |
60000 |
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Smith |
32000 |
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Jones |
24000 |
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754112 |
754112 |
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The following notes are available:
- Stock at 31 December 2021, $120,500
- Salaries paid in advance $4600
- insurance owing $380
- Increase provision for bad debt to $1700
- Annual salaries to Patrick $2400; Jones $1400
- Interest on drawings 5% per annum
- Interest on capital 10% percent
- Depreciation on Motor van is 15 % per annum on the
reducing balance method and office equipment 20% on cost
Prepare an Income statement for PSJ Electrical for the year ended December 31, 2021
Step by step
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