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 Gadgets Work Sheet For 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 8,214 8,214 8,214 Accounts Receivable 6,720 6,720 6,720 Merchandise Inventory 14,210 (b) 16,800 (a) 14,210 16,800 16,800 Supplies 680 (c) 380 300 300 Prepaid Insurance 800 (d) 200 600 600 Building 80,000 80,000 80,000 Accum. Depr.—Building 13,600 (e) 4,000 17,600 17,600 Accounts Payable 5,280 5,280 5,280 Wages Payable (f) 280 280 280 Sales Tax Payable 326 326 326 J. M. Gimbel, Capital 87,883 87,883 87,883 J. M. Gimbel, Drawing 8,000 8,000 8,000 Income Summary (a) 14,210 (b) 16,800 14,210 16,800 14,210 16,800 Sales 86,000 86,000 86,000 Sales Returns and Allowances 1,840 1,840 1,840 Purchases 54,200 54,200 54,200 Purchases Returns and Allowances 2,813 2,813 2,813 Purchases Discounts 1,084 1,084 1,084 Freight-In 800 800 800 Wages Expense 16,800 (f) 280 17,080 17,080 Advertising Expense 784 784 784 Supplies Expense (c) 380 380 380 Phone Expense 2,100 2,100 2,100 Utilities Expense 1,310 1,310 1,310 Insurance Expense (d) 200 200 200 Depr. Expense—Building (e) 4,000 4,000 4,000 Miscellaneous Expense 386 386 386 Inerest Expense 142 142 142 196,986 196,986 35,870 35,870 218,066 218,066 97,432 106,697 120,634 111,369 Net Income 9,265 9,265 106,697 106,697 120,634 120,634
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 | 8,214 | 8,214 | 8,214 | |||||||
| 6,720 | 6,720 | 6,720 | ||||||||
| Merchandise Inventory | 14,210 | (b) 16,800 | (a) 14,210 | 16,800 | 16,800 | |||||
| Supplies | 680 | (c) 380 | 300 | 300 | ||||||
| Prepaid Insurance | 800 | (d) 200 | 600 | 600 | ||||||
| Building | 80,000 | 80,000 | 80,000 | |||||||
| Accum. Depr.—Building | 13,600 | (e) 4,000 | 17,600 | 17,600 | ||||||
| Accounts Payable | 5,280 | 5,280 | 5,280 | |||||||
| Wages Payable | (f) 280 | 280 | 280 | |||||||
| Sales Tax Payable | 326 | 326 | 326 | |||||||
| J. M. Gimbel, Capital | 87,883 | 87,883 | 87,883 | |||||||
| J. M. Gimbel, Drawing | 8,000 | 8,000 | 8,000 | |||||||
| Income Summary | (a) 14,210 | (b) 16,800 | 14,210 | 16,800 | 14,210 | 16,800 | ||||
| Sales | 86,000 | 86,000 | 86,000 | |||||||
| Sales Returns and Allowances | 1,840 | 1,840 | 1,840 | |||||||
| Purchases | 54,200 | 54,200 | 54,200 | |||||||
| Purchases Returns and Allowances | 2,813 | 2,813 | 2,813 | |||||||
| Purchases Discounts | 1,084 | 1,084 | 1,084 | |||||||
| Freight-In | 800 | 800 | 800 | |||||||
| Wages Expense | 16,800 | (f) 280 | 17,080 | 17,080 | ||||||
| Advertising Expense | 784 | 784 | 784 | |||||||
| Supplies Expense | (c) 380 | 380 | 380 | |||||||
| Phone Expense | 2,100 | 2,100 | 2,100 | |||||||
| Utilities Expense | 1,310 | 1,310 | 1,310 | |||||||
| Insurance Expense | (d) 200 | 200 | 200 | |||||||
| Depr. Expense—Building | (e) 4,000 | 4,000 | 4,000 | |||||||
| Miscellaneous Expense | 386 | 386 | 386 | |||||||
| Inerest Expense | 142 | 142 | 142 | |||||||
| 196,986 | 196,986 | 35,870 | 35,870 | 218,066 | 218,066 | 97,432 | 106,697 | 120,634 | 111,369 | |
| Net Income | 9,265 | 9,265 | ||||||||
| 106,697 | 106,697 | 120,634 | 120,634 |
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