Adjusting Entries For each of the following unrelated situations, prepare the necessary adjusting entry in general journal form: a. Unrecorded depreciation on equipment is $910. b. The Supplies account has a balance of $3,290. Supplies on hand at the end of the period totaled $1,400. c. On the date for preparing financial statements, an estimated utilities expense of $690 has been incurred, but no utility bill has been received. Use the Utilities Payable account. d. On the first day of the current month, rent for four months was paid and recorded as a $3,100 debit to Prepaid Rent and a $3,100 credit to Cash. Monthly statements are now being prepared. Record Rent Expense for current month. e. Nine months ago, Solid Insurance Company sold a one-year policy to a customer and recorded the receipt of the premium by debiting Cash for $924 and crediting Unearned Premium Revenue $924. No adjusting entries have been prepared during the nine-month period. Annual financial statements are now being prepared. f. At the end of the accounting period, employee wages of $1,265 have been incurred but not paid. g. At the end of the accounting period, $600 of interest has been earned but not yet received on notes receivable that are held.
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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