required entries in the General Journal: (See the General Ledger tab in the workbook Chapter 03 b - Problem 3-1 Forms for the accounts in OPJ’s accounting system.) Feb 01 Take $4,000 cash out of Big Bank to pay for
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.
This problem will utilize the OverPriced Jeans company (OPJ) from Problem 2-1. Use the Excel
workbook Chapter 03 b - Problem 3-1 Forms to complete this problem.
Notice that the beginning balances have been put into the General Ledger accounts. These
beginning account balances were the January ending account balances from Problem 2-1.
Requirement 1
For each of the following transactions make the required entries in the General Journal:
(See the General Ledger tab in the workbook Chapter 03 b - Problem 3-1 Forms for the accounts in OPJ’s
accounting system.)
Feb 01 Take $4,000 cash out of Big Bank to pay for February’s warehouse rent.
Feb 04 Sale of inventory to a customer – selling price $62,000 – cost of inventory sold
$16,000 – customer paid cash which was deposited in Big Bank.
Feb 07 Take $10,000 cash out of Little Bank to pay employees for wages they have earned.
Feb 15 Sale of inventory to a customer – selling price $88,000 – cost of inventory sold
$22,000 – customer will pay in the future.
Feb 18 Sale of inventory to a customer – selling price $110,000 – cost of inventory sold
$28,000 – customer pays $40,000 cash which is deposited in Little Bank – customer
will pay for the remaining amount of the sale in 30 days.
Feb 22 Purchase additional inventory – pay $17,000 cash out of Big Bank for the inventory.
Feb 27 Take $23,000 cash out of Little Bank to pay employees for wages they have earned.
Feb 28 Adjust the Interest Payable-Big Bank account to record the $600 of interest owed to
Big Bank for February – interest will be paid in June.
Feb 28 Adjust the Interest Payable-Little Bank account to record the $450 of interest owed
to Little Bank for February – interest will be paid in March.
Requirement 2
Post the entries from the General Journal to the General Ledger accounts.
Requirement 3
Compute an ending balance for each General Ledger account.
Requirement 4
Prepare a Trial Balance.
Requirement 5
Prepare the “What Caused the Change in Retained Earnings” report.
Requirement 6
Prepare OPJ’s Balance Sheet as of February 28, 2021.
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