Assessing Financial Statement Effects of Transactions and Adjustments Selected accounts of Piotroski Properties, a real estate management firm, are shown below as of January 31, before any accounts have been adjusted. Prepaid Insurance $6,660 Supplies 1,930 Office Equipment 5,952 Unearned Rent Revenue 5,250 Salaries Expense 3,100 Rent Revenue 15,000 Piotroski Properties prepares monthly financial statements. Using the following information, adjust the accounts as necessary on January 31 using
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.
Assessing Financial Statement Effects of Transactions and Adjustments
Selected accounts of Piotroski Properties, a real estate management firm, are shown below as of January 31, before any accounts have been adjusted.
| Prepaid Insurance | $6,660 |
| Supplies | 1,930 |
| Office Equipment | 5,952 |
| Unearned Rent Revenue | 5,250 |
| Salaries Expense | 3,100 |
| Rent Revenue | 15,000 |
Piotroski Properties prepares monthly financial statements. Using the following information, adjust the accounts as necessary on January 31 using the financial statements effect template.
(a) Prepaid insurance represents a three-year premium paid on January 1.
(b) Supplies of $950 were still available on January 31.
(c) Office equipment is expected to last eight years (or 96 months).
(d) Earlier this month, on January 1, Piotroski collected $5,250 for six months' rent in advance from a tenant renting space for $875 per month.
(e) Salaries of $490 have been earned by employees but yet not recorded as of January 31.
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Balance Sheet
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| Transaction | Cash Asset |
+ | Noncash Assets |
= | Liabilities | + | Contributed Capital |
+ | Earned Capital |
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| (e) | Answer | Answer | Answer | Answer | Answer |
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Income Statement
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|---|---|---|---|---|
Revenue |
- |
Expenses |
= |
Net Income |
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| Answer | Answer | Answer |
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