Bartow Photographic Services takes wedding and graduation photographs. At December 31, theend of Bartow’s accounting period, the following information is available:a. All wedding photographs are paid for in advance, and all cash collected for them is creditedto Unearned Service Revenue. Except for a year end adjusting entry, no other entries aremade for service revenue from wedding photographs. During the year, Bartow received$42,600 for wedding photographs. At year end, $37,400 of services had been performed.The beginning-of-the-year balance of Unearned Service Revenue was zero.b. During December, Bartow photographed 225 members of the next year’s graduating class ofShaw High School. The school has asked Bartow to print one copy of a photograph of eachstudent for the school files. Bartow delivers these photographs on December 28 and will billthe school $5.00 per student in January of next year. Revenue from photographs ordered bystudents will be recorded as the orders are received during the early months of next year.c. Equipment used for developing and printing was rented for $22,500. The rental term wasfor 1 year beginning on August 1 and the entire year of rent was paid on August 1. The paymentwas debited to Prepaid Rent.d. Depreciation on the firm’s building for the current year is $9,400.e. Wages of $4,170 are owed but unpaid and unrecorded at December 31.f. Supplies at the beginning of the year were $2,400. During the year, supplies costing $19,600were purchased from Kodak. When the purchases were made, their cost was debited to Supplies.At year end, a physical inventory indicated that supplies costing $4,100 were on hand.Required:1. Prepare the adjusting entries for each of these items.2. CONCEPTUAL CONNECTION By how much would net income be overstated or understatedif the accountant failed to make the adjusting 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.
| Bartow Photographic Services takes wedding and graduation photographs. At December 31, the end of Bartow’s accounting period, the following information is available: a. All wedding photographs are paid for in advance, and all cash collected for them is credited to Unearned Service Revenue. Except for a year end adjusting entry, no other entries are made for service revenue from wedding photographs. During the year, Bartow received $42,600 for wedding photographs. At year end, $37,400 of services had been performed. The beginning-of-the-year balance of Unearned Service Revenue was zero. b. During December, Bartow photographed 225 members of the next year’s graduating class of Shaw High School. The school has asked Bartow to print one copy of a photograph of each student for the school files. Bartow delivers these photographs on December 28 and will bill the school $5.00 per student in January of next year. Revenue from photographs ordered by students will be recorded as the orders are received during the early months of next year. c. Equipment used for developing and printing was rented for $22,500. The rental term was for 1 year beginning on August 1 and the entire year of rent was paid on August 1. The payment was debited to Prepaid Rent. d. e. Wages of $4,170 are owed but unpaid and unrecorded at December 31. f. Supplies at the beginning of the year were $2,400. During the year, supplies costing $19,600 were purchased from Kodak. When the purchases were made, their cost was debited to Supplies. At year end, a physical inventory indicated that supplies costing $4,100 were on hand. Required: 1. Prepare the 2. CONCEPTUAL CONNECTION By how much would net income be overstated or understated if the accountant failed to make the adjusting entries? |
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