Simmons Consulting Co. has the following accounts in its ledger: Cash; Accounts Receivable; Supplies; Office Equipment; Accounts Payable; Michael Short, Capital; Michael Short, Drawing; Fees Earned; Rent Expense; Advertising Expense; Utilities Expense; Miscellaneous Expense. Journalize the following selected transactions for October 20Y3 in a two-column journal. Journal entry explanations may be omitted. Oct. 1. Paid rent for the month, $4,800. 3. Paid advertising expense, $2,500. 5. Paid cash for supplies, $1,390. 6. Purchased office equipment on account, $10,670. 10. Received cash from customers on account, $19,730. 15. Paid creditors on account, $9,480. 27. Paid cash for miscellaneous expenses, $530. 30. Paid telephone bill (utility expense) for the month, $220. 31. Fees earned and billed to customers for the month, $38,620. 31. Paid electricity bill (utility expense) for the month, $1,540. 31. Withdrew cash for personal use, $6,700.
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.
Simmons Consulting Co. has the following accounts in its ledger: Cash;
Journalize the following selected transactions for October 20Y3 in a two-column journal.
| Oct. | 1. | Paid rent for the month, $4,800. |
| 3. | Paid advertising expense, $2,500. | |
| 5. | Paid cash for supplies, $1,390. | |
| 6. | Purchased office equipment on account, $10,670. | |
| 10. | Received cash from customers on account, $19,730. | |
| 15. | Paid creditors on account, $9,480. | |
| 27. | Paid cash for miscellaneous expenses, $530. | |
| 30. | Paid telephone bill (utility expense) for the month, $220. | |
| 31. | Fees earned and billed to customers for the month, $38,620. | |
| 31. | Paid electricity bill (utility expense) for the month, $1,540. | |
| 31. | Withdrew cash for personal use, $6,700. |
Journal Entries:
Journal entries are those which are recorded for every transaction which takes place during the accounting period. Here, two or more than two accounts are affected for every transaction. There are two accounts that are broadly classified, they are, Temporary Accounts and Permanent Accounts.
Temporary Accounts: These accounts are closed every accounting period. And, they are reopened if any transaction with them occurs. These accounts include Revenues, expenses, dividends, drawings.
Permanent Accounts: These accounts are not closed at the end of the accounting period, and the balance of these accounts is carry forward to the next year. These accounts include Assets, Liabilities, and Equity.
Normal Account Balances of the following Accounts:
Assets: Debit Balance: If there is an increase, we debit it or add it, and if there is a decrease we credit it or subtract it.
Liabilities: Credit Balance: If there is an increase, we credit it or add it, and if there is a decrease we debit it or subtract it.
Equity: Credit Balance: If there is an increase, we credit it or add it, and if there is a decrease we debit it or subtract it.
Revenues: Credit Balance: If there is an increase, we credit it or add it, and if there is a decrease we debit it or subtract it.
Expenses: Debit Balance: If there is an increase, we debit it or add it, and if there is a decrease we credit it or subtract it.
So, when recording the journal entries these balances discussed above should be kept in mind.
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