Mr. Arish opened Arish’s Carpet Cleaners on March 1, 2021. During March, the following transactions were completed. Mar. 1: Invested $15,000 cash in the business. Mar. 1: Purchased used Lorry for $6,000, paying $3,000 cash and the balance on account. Mar. 3: Purchased cleaning supplies for $1,500 on account. Mar. 5: Paid $1,200 cash on one-year insurance policy effective March 1. Mar. 14: Billed customers $4,800 for cleaning services. Mar. 18: Paid $1,500 cash on amount owed on Lorry and $500 on amount owed on cleaning supplies. Mar. 20: Paid $2,000 cash for employee salaries. Mar. 21: Collected $2,800 cash from customers billed on March 14. Mar. 28: Billed customers $2,500 for cleaning services. Mar. 31: Paid advertising expenses of $500. Mar. 31: Withdrew $1000 cash for personal use. Requirements: a) Journalize the March transactions. b) Prepare necessary Ledger Accounts. c) Prepare a Trial Balance at March 31.
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.
Mr. Arish opened Arish’s Carpet Cleaners on March 1, 2021. During March, the following
transactions were completed.
Mar. 1: Invested $15,000 cash in the business.
Mar. 1: Purchased used Lorry for $6,000, paying $3,000 cash and the balance on
account.
Mar. 3: Purchased cleaning supplies for $1,500 on account.
Mar. 5: Paid $1,200 cash on one-year insurance policy effective March 1.
Mar. 14: Billed customers $4,800 for cleaning services.
Mar. 18: Paid $1,500 cash on amount owed on Lorry and $500 on amount owed on
cleaning supplies.
Mar. 20: Paid $2,000 cash for employee salaries.
Mar. 21: Collected $2,800 cash from customers billed on March 14.
Mar. 28: Billed customers $2,500 for cleaning services.
Mar. 31: Paid advertising expenses of $500.
Mar. 31: Withdrew $1000 cash for personal use.
Requirements:
a) Journalize the March transactions.
b) Prepare necessary Ledger Accounts.
c) Prepare a
d) Journalize the following adjustments and prepare an adjusted Trial Balance:
(i) Earned but unbilled revenue at March 31 was $500.
(ii) Depreciation on equipment for the month was $200.
(iii) One-twelfth of the insurance expired.
(iv) An inventory count shows $400 of cleaning supplies on hand at March 31.
(v) Accrued but unpaid employee salaries were $700.
e) Prepare the Income Statement and Owner’s Equity Statement for March and a classified Financial Position at March 31.
f) Journalize Closing Entries.
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