Assume for each of the following independent cases that the annual accounting period ends onDecember 31 and that the total of all revenue accounts was $150,000 and the total of all expenseaccounts was $130,000.Case A: Assume that the business is a sole proprietorship owned by Proprietor A. Prior tothe closing entries, the Capital account reflected a credit balance of $50,000 and theDrawings account showed a balance of $8,000.Case B: Assume that the business is a partnership owned by Partner A and Partner B. Priorto the closing entries, the owners’ equity accounts reflected the following balances:A, Capital, $40,000; B, Capital, $38,000; A, Drawings, $5,000; and B, Drawings,$9,000. Profits and losses are divided equally.Case C: Assume that the business is a corporation. Prior to the closing entries, the stockholders’ equity accounts showed the following: Capital Stock, par $10, authorized 30,000shares, outstanding 15,000 shares; Additional Paid-In Capital, $5,000; RetainedEarnings, $65,000.Required:1. Give all the closing entries required at December 31 for each of the separate cases.2. Show how the equity section of the balance sheet would appear at December 31 for each case.Show computations.
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.
Assume for each of the following independent cases that the annual accounting period ends on
December 31 and that the total of all revenue accounts was $150,000 and the total of all expense
accounts was $130,000.
Case A: Assume that the business is a sole proprietorship owned by Proprietor A. Prior to
the closing entries, the Capital account reflected a credit balance of $50,000 and the
Drawings account showed a balance of $8,000.
Case B: Assume that the business is a
to the closing entries, the owners’ equity accounts reflected the following balances:
A, Capital, $40,000; B, Capital, $38,000; A, Drawings, $5,000; and B, Drawings,
$9,000.
Case C: Assume that the business is a corporation. Prior to the closing entries, the
shares, outstanding 15,000 shares; Additional Paid-In Capital, $5,000; Retained
Earnings, $65,000.
Required:
1. Give all the closing entries required at December 31 for each of the separate cases.
2. Show how the equity section of the
Show computations.
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