The unadjusted trial balance of Digit Line Co., as of July 31, 2013 is provided below. The company started its operations on 1, 2013, and provides internet access service. The adjusting entries are made monthly, and closing entries are made at the end of the year. Cash Notes Receivable Accounts Receivable Unexpired Insurance Supplies Equipment Accumulated depreciation: Equipment Notes Payable Accounts Payable Unearned Internet Service Revenue Capital Stocks Retained Earnings Internet Service Revenue Advertising Expense Salaries Expense Supplies Expense Depreciation Expense: Equipment Utilities Expense Insurance Expense Interest Expense Dividends Total Digit Line Co. Trial Balance July 31, 2013 Debits $11 075 20 000 12 250 2 400 750 24 000 1 800 15 000 750 1000 4 200 800 175 5 000 99 200 ID Credits 1 000 15 000 2 400 4 800 33 000 12 000 31 000 99 200 Additional information: 1. There was $120 of supplies on hand as of July 31, 2013; 2. A contract was signed with ABC Inc. to provide internet service for a conference conducted by ABC Inc. Digit Line Co. charges $60 per one day of service provided. The conference started on July 20, 2013, and will continue till August 5, 2013; Equipment was purchased on May 1, 2013 with estimated useful life of 4 years. 4. $4,000 was earned from the cash collected in advance from clients; 3. 5. $15000 was borrowed from the bank on June 1 2013, for six month at 14%. Interest is payable at the beginning of the next month. 6. Salaries of employees earned for the month of July is $12,000 dollars, payable on August 5, 2013; 7. Insurance was purchased for eight month on May 1, 2013; D Required: Based on the information provided above (in trial balance and additional information), prepare adjusting entries as of July 31, 2013. Show all supporting calculations!
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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