The following events concern Anita Moore, a Manitoba law school graduate, for March 2021: 1. On March 4, she spent $20 on a lottery ticket. 2. On March 7, she won $285,000 in the lottery and immediately quit her job as a junior lawyer. 3. On March 10, she decided to open her own law practice, and deposited $80,000 of her winnings in a business chequing account, Moore Legal Services. 4. On March 14, she purchased a new luxury condominium with a down payment of $150,000 from her personal funds plus a home mortgage of $250,000. 5. On March 15, Anita signed a rental agreement for her law office space for $2,500 a month, starting March 15. She paid the first month’s rent, as it is due on the 15th of each month. 6. On March 19, she hired a receptionist. He will be paid $675 a week and will begin working on March 24. 7. On March 20, she purchased equipment for her law practice from a company that had just declared bankruptcy. The equipment was worth at least $15,000 but Anita was able to buy it for only $8,300. 8. On March 21, she purchased $275 of supplies on account. 9. On March 24, she purchased an additional $6,000 of equipment for her law practice for $2,500 plus a $3,500 note payable due in six months. 10. On March 31, she performed $3,800 of legal services on account. 11. On March 31, she received $2,500 cash for legal services to be provided in April. 12. On March 31, she paid her receptionist $675 for the week. 13. On March 31, she paid $275 for the supplies purchased on account on March 21. Prepare a tabular analysis of the effects of the above transactions for Anita Moore's law practice on the accounting equation. Prepare a balance sheet 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.
| 1. | On March 4, she spent $20 on a lottery ticket. | |
| 2. | On March 7, she won $285,000 in the lottery and immediately quit her job as a junior lawyer. | |
| 3. | On March 10, she decided to open her own law practice, and deposited $80,000 of her winnings in a business chequing account, Moore Legal Services. | |
| 4. | On March 14, she purchased a new luxury condominium with a down payment of $150,000 from her personal funds plus a home mortgage of $250,000. | |
| 5. | On March 15, Anita signed a rental agreement for her law office space for $2,500 a month, starting March 15. She paid the first month’s rent, as it is due on the 15th of each month. | |
| 6. | On March 19, she hired a receptionist. He will be paid $675 a week and will begin working on March 24. | |
| 7. | On March 20, she purchased equipment for her law practice from a company that had just declared bankruptcy. The equipment was worth at least $15,000 but Anita was able to buy it for only $8,300. | |
| 8. | On March 21, she purchased $275 of supplies on account. | |
| 9. | On March 24, she purchased an additional $6,000 of equipment for her law practice for $2,500 plus a $3,500 note payable due in six months. | |
| 10. | On March 31, she performed $3,800 of legal services on account. | |
| 11. | On March 31, she received $2,500 cash for legal services to be provided in April. | |
| 12. | On March 31, she paid her receptionist $675 for the week. | |
| 13. | On March 31, she paid $275 for the supplies purchased on account on March 21. |
Prepare a
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