All of the current year's entries for Zimmerman Company have been made, except the following adjusting entries. The company's annual accounting year ends on December 31. On September 1 of the current year, Zimmerman collected six months' rent of $8,940 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,940. On October 1 of the current year, the company borrowed $13,200 from a local bank and signed a one-year, 14 percent note for that amount. The principal and interest are payable on the maturity date. Depreciation of $2,900 must be recog
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.
All of the current year's entries for Zimmerman Company have been made, except the following
- On September 1 of the current year, Zimmerman collected six months' rent of $8,940 on storage space. At that date, Zimmerman debited Cash and credited Unearned Rent Revenue for $8,940.
- On October 1 of the current year, the company borrowed $13,200 from a local bank and signed a one-year, 14 percent note for that amount. The principal and interest are payable on the maturity date.
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Depreciation of $2,900 must be recognized on a service truck purchased in July of the current year at a cost of $25,000. - Cash of $4,500 was collected on November of the current year for services to be rendered evenly over the next year beginning on November 1 of the current year. Unearned Service Revenue was credited when the cash was received.
- On November 1 of the current year, Zimmerman paid a one-year premium for property insurance, $9,240, for coverage starting on that date. Cash was credited and Prepaid Insurance was debited for this amount.
- The company earned service revenue of $3,800 on a special job that was completed December 29 of the current year. Collection will be made during January of the next year. No entry has been recorded.
- At December 31 of the current year, wages earned by employees totaled $13,900. The employees will be paid on the next payroll date in January of the next year.
- On December 31 of the current year, the company estimated it owed $560 for this year's property taxes on land. The tax will be paid when the bill is received in January of next year.
2. Prepare the adjusting entry required for each transaction at December 31 of the current year.
Note: If no entry is required for a transaction/event, select "No
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