ated over a period of five years (60 months). On the first of each month, the theater pays the interest that accrued in the prior month on its note payable. At August 31, accrued interest payable on this note amounts to $1,500. The theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of $500 per month. On June 28, the YM
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.
Campus Theater adjusts its accounts every month. Below is the company’s unadjusted
Other Data
- Film rental expense for the month is $15,200. However, the film rental expense for several months has been paid in advance.
- The building is being
depreciated over a period of 20 years (240 months). - The fixtures and equipment are being depreciated over a period of five years (60 months).
- On the first of each month, the theater pays the interest that accrued in the prior month on its note payable. At August 31, accrued interest payable on this note amounts to $1,500.
- The theater allows the local YMCA to bring children attending summer camp to the movies on any weekday afternoon for a fixed fee of $500 per month. On June 28, the YMCA made a $1,500 advance payment covering the months of July, August, and September.
- The theater receives a percentage of the revenue earned by Tastie Corporation, the concessionaire operating the snack bar. For snack bar sales in August, Tastie owes Campus Theater $2,250, payable on September 10. No entry has yet been made to record this revenue. (CreditConcessions Revenue.)
- Salaries earned by employees, but not recorded or paid as of August 31, amount to $1,700. No entry has yet been made to record this liability and expense.
- Income taxes expense for August is estimated at $4,200. This amount will be paid in the September 15 installment payment.
- Utilities expense is recorded as monthly bills are received. No adjusting entries for utilities expense are made at month-end.
Instructions
a) For each of the numbered paragraphs, prepare the necessary adjusting entry (including an explanation).
b) Refer to the balances shown in the unadjusted trial balance at August 31. How many months of expense are included in each of the following account balances? (Remember, Campus Theater adjusts its accounts monthly. Thus, the accounts shown were last adjusted on July 31, 2011.)
- Utilities Expense
- Depreciation Expense
Accumulated Depreciation : Building
c) Prepare Adjusted Trail Balance.
d) Prepare Income Statement,
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