Newday Traders is a haberdashery retailer based in Kingston. The business has provided the following infomation for the year ending December 31, 2020: Bank 40,000 Payments to suppliers 170,000 Cash purchases 458,560 Rent 300,000 Fixtures 2,500 Rates 73,000 Wages 53,960 General office expenses Balance b/d 492,020 32,500 57,500 220,000 8,500 66,000 11,500 78,000 132,000 Cash sales Receipts from debtors Motor vehicle Bank interest Commission Balance c/d Loan Drawings 1,098,020 1,098,020 List of balances: Details Creditors an 1 Dec 31 83,200 94,500 75,500 194,000 340,000 720,000 91,030 82,400 95,600 116,000 340,000 400,000 210,000 7,600 25,000 22,000 Debtors Stock Loan Building Motor vehicle Fixtures Rates prepaid Commission owing Wages owing 4,600 21,500 14,500 Additional notes: • Stock taken for personal use amounted to $9,500 • Amounts written off as bad debts totaled $8,500 • Discounts given to credit customers amounted to $3,400 • The motor vehicle sale was at net book value Using the information provided, derive the trial balance, statement of profit or loss, and statement of financial position for Newday Traders for the period.
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.
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