Akram Fun is operating his own gaming business, Fun Unlimited. The unadjusted trial balance for Fun Unlimited at March 31, 2021 had the following normal balances. The company prepares quarterly financial statements. Account Titles . . . . . . . . . . $ Accounts Payable . . . . . . . . . . . . . 3520 Accounts Receivable . . . . . . . . . . 5500 Akram Fun, Capital . . . . . . . . . . 19000 Cash . . . . . . . . . . . . . . . . . . . . . . . 53300 Depreciation Expense - Equipment . . . . . . . . . . 310 Depreciation Expense - Machinery . . . . . . . . . . 120 Equipment . . . . . . . . . . . . . . . . . 8900 Interest payable . . . . . . . . . . . . . . 1000 Interest Revenue . . . . . . . . . . . . . 630 Machinery . . . . . . . . . . . . . . . . 5600 Notes Payable . . . . . . . . . . . . . 42400 Prepaid Insurance . . . . . . . . . . 2700 Rent Expense . . . . . . . . . . . . . . 310 Service Revenue . . . . . . . . . . . . 3400 Supplies . . . . . . . . . . . . . . . . . . . 200 Unearned Service Revenue . . 3500 Utilities Expense . . . . . . . . . . . . 400 Other Data: Errors: 1. A debit posting of $2500 to the Accounts Receivable account was made twice. 2. A payment for Utilities Expense was recorded as $230 instead of $530. Adjustments: 3. The annual interest rate on Notes Payable is 20 %. (The Notes Payable was issued on February 1, 2021) 4. Fun Unlimited has separate insurance policies on its equipment and its machinery. Policy ABC on the equipment, which was purchased on March 1, 2020 for $2500, has a term of one year. Policy XYZ on the machinery, which was purchased on March 1, 2021 for $3600, has a term of three years. 5. Fun Unlimited has 9 salaried employees. Salaries are paid every Thursday for the current week. 4 employees receive a salary of $200 each per week, while the rest of the employees receive a salary of $600 each per week. Employees work five days a week (Sunday to Thursday) and they do not work on weekends (Friday and Saturday). Assume March 31 is a Monday. All the employees work through March 31st. Instructions: (a) Journalize the correcting entries for the 3-month period January 1, 2021–March 31, 2021. (b) Journalize the adjusting entries for the 3-month period January 1, 2021–March 31, 2021. (c) Journalize the closing entries for Interest Revenue,Salaries Expense and Utilities Expense for the 3-month period January 1, 2021–March 31, 2021.
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.
Akram Fun is operating his own gaming business, Fun Unlimited. The unadjusted
Account Titles . . . . . . . . . . $
Accounts Payable . . . . . . . . . . . . . 3520
Akram Fun, Capital . . . . . . . . . . 19000
Cash . . . . . . . . . . . . . . . . . . . . . . . 53300
Depreciation Expense - Machinery . . . . . . . . . . 120
Equipment . . . . . . . . . . . . . . . . . 8900
Interest payable . . . . . . . . . . . . . . 1000
Interest Revenue . . . . . . . . . . . . . 630
Machinery . . . . . . . . . . . . . . . . 5600
Notes Payable . . . . . . . . . . . . . 42400
Prepaid Insurance . . . . . . . . . . 2700
Rent Expense . . . . . . . . . . . . . . 310
Service Revenue . . . . . . . . . . . . 3400
Supplies . . . . . . . . . . . . . . . . . . . 200
Unearned Service Revenue . . 3500
Utilities Expense . . . . . . . . . . . . 400
Other Data:
Errors:
1. A debit posting of $2500 to the Accounts Receivable account was made twice.
2. A payment for Utilities Expense was recorded as $230 instead of $530.
Adjustments:
3. The annual interest rate on Notes Payable is 20 %. (The Notes Payable was issued on February 1, 2021)
4. Fun Unlimited has separate insurance policies on its equipment and its machinery. Policy ABC on the equipment, which was purchased on March 1, 2020 for $2500, has a term of one year. Policy XYZ on the machinery, which was purchased on March 1, 2021 for $3600, has a term of three years.
5. Fun Unlimited has 9 salaried employees. Salaries are paid every Thursday for the current week. 4 employees receive a salary of $200 each per week, while the rest of the employees receive a salary of $600 each per week. Employees work five days a week (Sunday to Thursday) and they do not work on weekends (Friday and Saturday). Assume March 31 is a Monday. All the employees work through March 31st.
Instructions:
(a) Journalize the correcting entries for the 3-month period January 1, 2021–March 31, 2021.
(b) Journalize the
(c) Journalize the closing entries for Interest Revenue,Salaries Expense and Utilities Expense for the 3-month period January 1, 2021–March 31, 2021.
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