a) Fort Road Foxtrot’s adjusted trial balance for December 2018 is given. Prepare Income Statement and Balance sheet. Inventory $ 6,500 Common stock 45,000 Cash 16,550 Operating expenses 1,350 Notes payable 600 Interest expense 900 Depreciation expense 1,200 Net sales 12,800 Accounts receivable 9,600 Accounts payable 4,800 Long-term debt 55,000 Cost of goods sold 5,750 Buildings and equipment 122,000 Accumulated depreciation 34,000 Taxes 1,440 Retained earnings 15,250
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.
a) Fort Road Foxtrot’s adjusted
Income Statement and
Inventory $ 6,500
Common stock 45,000
Cash 16,550
Operating expenses 1,350
Notes payable 600
Interest expense 900
Net sales 12,800
Accounts payable 4,800
Long-term debt 55,000
Cost of goods sold 5,750
Buildings and equipment 122,000
Taxes 1,440
b) “Window dressing “in accounting is evil. Explain the statement and advise measures to
counter this. 300 words
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