Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded.
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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Bergo Bay's accounting system generated the following account balances on December 31. The company's manager
knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory,
and the accrued factory payroll (Factory Wages Payable) has not been recorded.
Notes payable
Cash
Accounts receivable
Raw materials inventory
Work in process inventory
Finished goods inventory
Prepaid rent
Accounts payable
Common stock
Retained earnings (prior year)
Sales
Cost of goods sold
Debit
$ 75,000
44,000
Credit
27,000
0
9,000
3,000
$ 9,600
12,600
30,000
90,000
204,800
Factory overhead
General and administrative expenses
115,000
25,000
49,000
Totals
$ 347,000
$ 347,000
These six documents must be processed to bring the accounting records up to date.
Materials requisition 10:
Materials requisition 11:
Materials requisition 12:
Labor time ticket 52:
Labor time ticket 53:
Labor time ticket 54:
$ 4,000 direct materials to Job 402
$ 7,700 direct materials to Job 404
$ 2,000 indirect materials
$ 7,000 direct labor to Job 402
$ 13,000 direct labor to Job 404
$ 5,000 indirect labor
Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost.
3. Prepare a revised list of account balances as of December 31. Hint: Use the prior year's Retained Earnings balance of $90,000 in
this list.
Cash
Accounts receivable
Raw materials inventory
Work in process inventory
Finished goods inventory
Prepaid rent
Accounts payable
Factory wages payable
BERGO BAY COMPANY
List of Account Balances
December 31
Debit
Credit
Notes payable
Common stock
Retained earnings (prior year)
Sales
Cost of goods sold
Factory overhead
General and administrative expenses
Totals
$
0 $
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