8) Prohibition Ltd. trial balance at December 31, 20207, is shown below. Prepare the closing emtries Prohibition Ltd. Trial Balance December 31, 2020 Debit $16,400 Cash Credit Accounts receivable 2,500 Prepaid insurance 3,400 Prepaid rent 6,500 Supplies 3,700 Equipment 27,500 Accumulated depreciation-equipment $10.200 Furniture 15,000 Accumulated depreciation-fumiture 7,600 Accounts payable 5,400 Salary payable 1,400 Unearned revenue 6.500 Common shares 20,600 Retained earnings 15,800 Dividends 3,000 Fees earned 28,900 Salary expense 4.900 Depreciation expense-equipment 3,800 Depreciation expense-furniture 2,500 Rent expense 4,800 Insurance expense 1,200 Supplies expense 500 Advertising expense 200 $26.400 $96.400
8) Prohibition Ltd. trial balance at December 31, 20207, is shown below. Prepare the closing emtries Prohibition Ltd. Trial Balance December 31, 2020 Debit $16,400 Cash Credit Accounts receivable 2,500 Prepaid insurance 3,400 Prepaid rent 6,500 Supplies 3,700 Equipment 27,500 Accumulated depreciation-equipment $10.200 Furniture 15,000 Accumulated depreciation-fumiture 7,600 Accounts payable 5,400 Salary payable 1,400 Unearned revenue 6.500 Common shares 20,600 Retained earnings 15,800 Dividends 3,000 Fees earned 28,900 Salary expense 4.900 Depreciation expense-equipment 3,800 Depreciation expense-furniture 2,500 Rent expense 4,800 Insurance expense 1,200 Supplies expense 500 Advertising expense 200 $26.400 $96.400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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Transcribed Image Text:8) Prohibition Ltd. trial balance at December 31, 20207, is shown below. Prepare the closing emtries.
Prohíbition Ltd.
Trial Balance
December 31, 2020
Cash
Debit
Credit
$16,400
Accounts receivable
2,500
Prepaid insurance
3,400
Prepaid rent
6,500
Supplies
3,700
Equipment
27,500
Accumulated depreciation-equipment
$10,200
Furniture
15,000
Accumulated depreciation-fumiture
7,600
Accounts payable
5,400
Salary payable
1,400
Unearned revenue
6.500
Common shares
20,600
Retained earnings
15,800
Dividends
3,000
Fees earned
28,900
Salary expense
4,900
Depreciation expense-equipment
3.800
Depreciation expense-furniture
2,500
Rent expense
4,800
Insurance expense
1,200
Supplies expense
500
Advertising expense
200
$26.400
$96.400
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