Barbara Brown started her own accounting firm, Brown Accounting, on June 1, 2024. Barbara wants to prepare monthly financial statements, so adjusting entries are required on June 30. Selected transactions for June follow: 1. 2. 3. 4. 5. 6. 7. 8. $780 of supplies were used during the month. Utilities expense incurred but not yet recorded or paid on June 30, 2024, is $231. Paid cash of $3,384 for a one-year insurance policy on June 1, 2024. The policy came into effect on this date. On June 1, purchased office equipment for $9,720 cash. It is being depreciated at $162 per month for 60 months. On June 1, Barbara signed a note payable for $8,200, 6% interest. Assume June 30 is a Wednesday and employees are paid on Fridays. Brown Accounting has two employees, who are paid $1,050 each for a five-day workweek that ends on Friday. On June 15, received a $1,160 advance cash payment from a client for accounting services expected to be provided in the future. As at June 30, one-half of these services had not been performed. Invoices representing $1,700 of services performed during the month of June have not been recorded as at June 30. Prepare adjusting entries for the items above. (Credit account titles are automatically indented when the amount is entered Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Li all debit entries before credit entries.)
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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