Below is the adjusted trial balance which was extracted from the books of Ready Hospital Supplies on June 30, the end of the company’s financial year. You are required to apply the accrual basis of accounting in the preparation of the company’s financial statements. Ready Hospital Supplies Adjusted Trial Balance as at June 30, 2020 Dr $ Cr $ Cash 127,000.00 Accounts Receivable 151,000.00 Allowance for Bad-Debts 19,500.00 Merchandise Inventory 186,000.00 Store Supplies 25,000.00 Prepaid Insurance 48,000.00 Prepaid Rent 14,000.00 Furniture & Fixtures 800,000.00 Accumulated Depreciation: Furniture & Fixtures 320,000.00 Computer Equipment 450,000.00 Accumulated Depreciation: Computer Equipment 45,000.00 Accounts Payable 133,500.00 Salaries Payable 14,000.00 Interest Payable 36,000.00 Unearned Sales Revenue 34,000.00 Long-Term Loan 360,000.00 Eva Ready, Capital 898,500.00 Eva Ready, Withdrawals 104,000.00 Sales Revenue 1,091,000.00 Sales Discount 7,000.00 Sales Returns & Allowances 5,500.00 Cost of Goods Sold 404,500.00 Salaries Expense 179,000.00 Insurance Expense 24,000.00 Utilities Expense 87,500.00 Rent Expense 168,000.00 Depreciation Expense – Furniture & Fixtures 64,000.00 Depreciation Expense – Computer Equipment 45,000.00 Store Supplies Expense 33,000.00 Gain on Disposal of Old Computer Equipment 14,000.00 Bad-Debt Expense 7,000.00 Interest Expense 36,000.00 Total 2,965,500.00 2,965,500.00 Using the Adjusted trial balance, generate the statements requested by Millionaire National Bank, i.e. A Multiple-Step Income Statement for the year ended June 30, 2020 A Statement of Owner’s Equity for the year ended June 30, 2020 A Classified Balance Sheet, in Report Format, at June 30, 2020
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.
Below is the adjusted
| Ready Hospital Supplies | ||
| Adjusted Trial Balance as at June 30, 2020 | ||
| Dr $ | Cr $ | |
| Cash | 127,000.00 | |
| 151,000.00 | ||
| Allowance for Bad-Debts | 19,500.00 | |
| Merchandise Inventory | 186,000.00 | |
| Store Supplies | 25,000.00 | |
| Prepaid Insurance | 48,000.00 | |
| Prepaid Rent | 14,000.00 | |
| Furniture & Fixtures | 800,000.00 | |
| 320,000.00 | ||
| Computer Equipment | 450,000.00 | |
| Accumulated Depreciation: Computer Equipment | 45,000.00 | |
| Accounts Payable | 133,500.00 | |
| Salaries Payable | 14,000.00 | |
| Interest Payable | 36,000.00 | |
| Unearned Sales Revenue | 34,000.00 | |
| Long-Term Loan | 360,000.00 | |
| Eva Ready, Capital | 898,500.00 | |
| Eva Ready, Withdrawals | 104,000.00 | |
| Sales Revenue | 1,091,000.00 | |
| Sales Discount | 7,000.00 | |
| Sales Returns & Allowances | 5,500.00 | |
| Cost of Goods Sold | 404,500.00 | |
| Salaries Expense | 179,000.00 | |
| Insurance Expense | 24,000.00 | |
| Utilities Expense | 87,500.00 | |
| Rent Expense | 168,000.00 | |
| Depreciation Expense – Furniture & Fixtures | 64,000.00 | |
| Depreciation Expense – Computer Equipment | 45,000.00 | |
| Store Supplies Expense | 33,000.00 | |
| Gain on Disposal of Old Computer Equipment | 14,000.00 | |
| Bad-Debt Expense | 7,000.00 | |
| Interest Expense | 36,000.00 | |
| Total | 2,965,500.00 | 2,965,500.00 |
Using the Adjusted trial balance, generate the statements requested by Millionaire National Bank, i.e.
- A Multiple-Step Income Statement for the year ended June 30, 2020
- A Statement of Owner’s Equity for the year ended June 30, 2020
- A Classified Balance Sheet, in Report Format, at June 30, 2020
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