Closing Entries From the work sheet shown below, prepare the following: 1. Prepare closing entries for Gimbel's Gifts and Gadgets in a general journal. If an amount box does not require an entry, leave it blank. 2. Prepare a post-closing trial balance. Gimbel's Gifts and GadgetsWork SheetFor Year Ended December 31, 20-1 TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Cash 8,217 8,217 8,217 Accounts Receivable 6,714 6,714 6,714 Merchandise Inventory 14,222 (b) 16,520 (a) 14,222 16,520 16,520 Supplies 661 (c) 376 285 285 Prepaid Insurance 760 (d) 190 570 570 Building 81,500 81,500 81,500 Accum. Depr.—Building 13,855 (e) 4,075 17,930 17,930 Accounts Payable 5,256 5,256 5,256 Wages Payable (f) 293 293 293 Sales Tax Payable 318 318 318 J. M. Gimbel, Capital 90,283 90,283 90,283 J. M. Gimbel, Drawing 8,200 8,200 8,200 Income Summary (a) 14,222 (b) 16,520 14,222 16,520 14,222 16,520 Sales 85,070 85,070 85,070 Sales Returns and Allowances 1,800 1,800 1,800 Purchases 54,200 54,200 54,200 Purchases Returns and Allowances 2,845 2,845 2,845 Purchases Discounts 1,059 1,059 1,059 Freight-In 805 805 805 Wages Expense 16,841 (f) 293 17,134 17,134 Advertising Expense 796 796 796 Supplies Expense (c) 376 376 376 Phone Expense 2,140 2,140 2,140 Utilities Expense 1,321 1,321 1,321 Insurance Expense (d) 190 190 190 Depr. Expense—Building (e) 4,075 4,075 4,075 Miscellaneous Expense 366 366 366 Interest Expense 143 143 143 198,686 198,686 35,676 35,676 219,574 219,574 97,568 105,494 122,006 114,080 Net Income 7,926 7,926 105,494 105,494 122,006 122,006
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.
Closing Entries
From the work sheet shown below, prepare the following:
1. Prepare closing entries for Gimbel's Gifts and Gadgets in a general journal. If an amount box does not require an entry, leave it blank.
2. Prepare a post-closing
| Gimbel's Gifts and Gadgets Work Sheet For Year Ended December 31, 20-1 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| TRIAL BALANCE | ADJUSTMENTS | ADJUSTED TRIAL BALANCE | INCOME STATEMENT | |||||||
| ACCOUNT TITLE | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT |
| Cash | 8,217 | 8,217 | 8,217 | |||||||
| 6,714 | 6,714 | 6,714 | ||||||||
| Merchandise Inventory | 14,222 | (b) 16,520 | (a) 14,222 | 16,520 | 16,520 | |||||
| Supplies | 661 | (c) 376 | 285 | 285 | ||||||
| Prepaid Insurance | 760 | (d) 190 | 570 | 570 | ||||||
| Building | 81,500 | 81,500 | 81,500 | |||||||
| Accum. Depr.—Building | 13,855 | (e) 4,075 | 17,930 | 17,930 | ||||||
| Accounts Payable | 5,256 | 5,256 | 5,256 | |||||||
| Wages Payable | (f) 293 | 293 | 293 | |||||||
| Sales Tax Payable | 318 | 318 | 318 | |||||||
| J. M. Gimbel, Capital | 90,283 | 90,283 | 90,283 | |||||||
| J. M. Gimbel, Drawing | 8,200 | 8,200 | 8,200 | |||||||
| Income Summary | (a) 14,222 | (b) 16,520 | 14,222 | 16,520 | 14,222 | 16,520 | ||||
| Sales | 85,070 | 85,070 | 85,070 | |||||||
| Sales Returns and Allowances | 1,800 | 1,800 | 1,800 | |||||||
| Purchases | 54,200 | 54,200 | 54,200 | |||||||
| Purchases Returns and Allowances | 2,845 | 2,845 | 2,845 | |||||||
| Purchases Discounts | 1,059 | 1,059 | 1,059 | |||||||
| Freight-In | 805 | 805 | 805 | |||||||
| Wages Expense | 16,841 | (f) 293 | 17,134 | 17,134 | ||||||
| Advertising Expense | 796 | 796 | 796 | |||||||
| Supplies Expense | (c) 376 | 376 | 376 | |||||||
| Phone Expense | 2,140 | 2,140 | 2,140 | |||||||
| Utilities Expense | 1,321 | 1,321 | 1,321 | |||||||
| Insurance Expense | (d) 190 | 190 | 190 | |||||||
| Depr. Expense—Building | (e) 4,075 | 4,075 | 4,075 | |||||||
| Miscellaneous Expense | 366 | 366 | 366 | |||||||
| Interest Expense | 143 | 143 | 143 | |||||||
| 198,686 | 198,686 | 35,676 | 35,676 | 219,574 | 219,574 | 97,568 | 105,494 | 122,006 | 114,080 | |
| Net Income | 7,926 | 7,926 | ||||||||
| 105,494 | 105,494 | 122,006 | 122,006 |
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