The following transactions took place in the month of January 2023 in the books of Ruth Charles Wholesale. Jan 1 Ms. Ruth Charles started her wholesale business with $44,000 cash Jan 2 she purchased Equipment costing $17,000 paying a deposit of $5,000 and signing a Note Payable for the remainder Jan 4 Brought Inventory costing $6,500 on credit Jan 6 Received 8% loan from Credit Union of 10,000 to purchase a motor vehicle for business use Jan 7 sold inventory for $ 10,500 cash Jan 8 Sold Inventory on credit for $ 12,000 Jan10 Purchased inventory costing $7,800 Jan 12 Paid rent for warehouse space $2,500 Jan 14 Paid salaries and wages of $9,000
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.
The following transactions took place in the month of January 2023 in the books of Ruth Charles Wholesale.
Jan 1 Ms. Ruth Charles started her wholesale business with $44,000 cash
Jan 2 she purchased Equipment costing $17,000 paying a deposit of $5,000 and signing a Note Payable for the remainder
Jan 4 Brought Inventory costing $6,500 on credit
Jan 6 Received 8% loan from Credit Union of 10,000 to purchase a motor vehicle for business use
Jan 7 sold inventory for $ 10,500 cash
Jan 8 Sold Inventory on credit for $ 12,000
Jan10 Purchased inventory costing $7,800
Jan 12 Paid rent for warehouse space $2,500
Jan 14 Paid salaries and wages of $9,000
Jan 16 Ruth took $3,500 cash for her own use
Jan 18 paid $2,500 to note payable
Jan 21 Inventory was return to accounts payable costing $500
Jan 23 Receive part payment from Accounts Receivables of $3,000
Jan 25 Paid Accounts Payable $2,000
Jan 26 purchased inventory for $3,700 cash
Jan 28 Cash sale of inventory $6,300
Jan 30 Customers returned wrongly ordered inventory costing $300
Requirements:
- Journalize the above transactions
Post the journal entries into the perspective ledgers (T-Accounts)- Prepare an unadjusted
Trial Balance for Ruth Charles Wholesale as at January 31, 2023
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