Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during its first four months of operations.
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.
Tristar Production Company began operations on September 1, 2024. Listed below are a number of transactions that occurred during its first four months of operations.
- On September 1, the company acquired five acres of land with a building that will be used as a warehouse. Tristar paid $200,000 in cash for the property. According to appraisals, the land had a fair value of $134,200 and the building had a fair value of $85,800.
- On September 1, Tristar signed a $50,000 noninterest-bearing note to purchase equipment. The $50,000 payment is due on September 1, 2025. Assume that 8% is a reasonable interest rate.
- On September 15, a truck was donated to the corporation. Similar trucks were selling for $3,500.
- On September 18, the company paid its lawyer $8,000 for organizing the corporation.
- On October 10, Tristar purchased equipment for cash. The purchase price was $25,000 and $1,000 in freight charges also were paid.
- On December 2, Tristar acquired equipment. The company was short of cash and could not pay the $6,500 normal cash price. The supplier agreed to accept 200 shares of the company's no-par common stock in exchange for the equipment. The fair value of the stock is not readily determinable.
- On December 10, the company acquired a tract of land at a cost of $30,000. It paid $2,500 down and signed a 10% note with both principal and interest due in one year. Ten percent is an appropriate rate of interest for this note.
Required:
Prepare journal entries to record each of the above transactions.
Note: Use tables, Excel, or a financial calculator. If no entry is required for a transaction/event, select "No
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