At the end of the fiscal year December 31st 2022, Time2Clean Services prepared their financial reports and discovered the following information: 1. Time2Clean's Supplies account at December 31 are $210. During the year, $1,500 of Supplies were purchased. On January 1st 2022, the account had a balance of $340. 2. 6 months rent period of $4,200 ending on March 1st, 2023 is due to be paid in April 2023. 3. Purchased $3,980 of new equipment in late December but debited to Utilities Expense instead. 4. Time2Clean paid for one-year fire insurance on September 30th, 2022 at $960. Previously, the business also purchased a 2 years insurance policy for $2,400 on June 1st. 5. The Accumulated Depreciation on Machinery at December 31st, 2021 showed the balance of $13,200. In 2022, the annual depreciation is estimated to be $4,400. 6. The business has five employees who earned $250 per day. Wages and salaries are paid every two weeks on Friday for five days work week. The lastest payment was made on December 20th. 7. The Unearned Service Revenue account had $25,750 credit balance on January 1st, 2022. This balance included $13,460 for the service expiring in June and $12,290 for the service expiring in October. On July 31st, the business received $4,800 from The Star for the services to be provided within 10 months. By the end of the year, only 40% of the work had not been performed. On November 1st, the business received $1,260 from White Palace for the services lasting 3 months. 8. Time2Clean signed a note $21,000 on August 15th. The note is dued in 6 months with 8% interest rate. Instructions: (a) Preparing necessary adjusting entries by the year ended December 31,2022. (b) Post to T-accounts all related transactions above.
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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