Question 2 Prepare adjusting journal entries for Blue Gardening in the GENERAL JOURNAL for the year ended 31st December 2018, for each of these situations. Narratives for each entry are required. Blue Gardening received RM6,000 from a client on November 15, 2018, for gardening services to be performed in December 2019, January 2020, and February 2021. The RM6,000 was recorded in Unearned Revenue on November 15. By the end of December, the gardening services for December have been performed. Blue Gardening invested RM100,000 into a 5% government bond some years ago. The 5% interest is due to be paid on 31st December every year. However, Blue Gardening has yet to receive the cheque from the government by 31st December 2018. Blue Gardening pays a total wage of RM5,000 every week to all of its staff working for a five-day workweek. Due to some unforeseen circumstances, the wages for the final week have not been paid. Blue Gardening paid RM24,000 for insurance for 12 months beginning on 1st September 2018. The amount was recorded as Prepaid Insurance on 1st September. Blue Gardening purchased a RM3,500 equipment on 1st January 2018. It has a useful life of three years and it will worth about RM500 at the end of three years. Blue Gardening uses the straight-line depreciation method.
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.
Question 2
Prepare
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Blue Gardening received RM6,000 from a client on November 15, 2018, for gardening services to be performed in December 2019, January 2020, and February 2021. The RM6,000 was recorded in Unearned Revenue on November 15. By the end of December, the gardening services for December have been performed.
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Blue Gardening invested RM100,000 into a 5% government bond some years ago. The 5% interest is due to be paid on 31st December every year. However, Blue Gardening has yet to receive the cheque from the government by 31st December 2018.
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Blue Gardening pays a total wage of RM5,000 every week to all of its staff working for a five-day workweek. Due to some unforeseen circumstances, the wages for the final week have not been paid.
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Blue Gardening paid RM24,000 for insurance for 12 months beginning on 1st September 2018. The amount was recorded as Prepaid Insurance on 1st September.
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Blue Gardening purchased a RM3,500 equipment on 1st January 2018. It has a useful life of three years and it will worth about RM500 at the end of three years. Blue Gardening uses the
straight-line depreciation method.
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