Closing Entries (Net Income) The work sheet for Major Advising for the month ended January 31, 20-- is shown. Major Advising Work Sheet (Partial) For Month Ended January 31, 20-- Income Statement Balance Sheet ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT Cash 1,339.00 Accounts Receivable 935.00 Supplies 346.00 Prepaid Insurance 800.00 Office Equipment 3,500.00 Accum. Depr.—Office Equipment 200.00 Accounts Payable 1,000.00 Wages Payable 300.00 Ed Major, Capital 4,100.00 Ed Major, Drawing 900.00 Advising Fees 4,140.00 Wages Expense 700.00 Advertising Expense 90.00 Rent Expense 500.00 Supplies Expense 150.00 Phone Expense 67.00 Electricity Expense 48.00 Insurance Expense 89.00 Gas and Oil Expense 53.00 Depr. Expense—Office Equipment 200.00 Miscellaneous Expense 23.00 1,920.00 4,140.00 7,820.00 5,600.00 Net Income 2,220.00 2,220.00 4,140.00 4,140.00 7,820.00 7,820.00 1. Enter the existing balance for each T account. Select Bal. and enter the amount. 3. Post the closing entries to the T accounts. If there is more than one closing entry for an account, enter in the order given in the journal.
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 (Net Income)
The work sheet for Major Advising for the month ended January 31, 20-- is shown.
| Major Advising Work Sheet (Partial) For Month Ended January 31, 20-- |
||||
|---|---|---|---|---|
| Income Statement | ||||
| ACCOUNT TITLE | DEBIT | CREDIT | DEBIT | CREDIT |
| Cash | 1,339.00 | |||
| 935.00 | ||||
| Supplies | 346.00 | |||
| Prepaid Insurance | 800.00 | |||
| Office Equipment | 3,500.00 | |||
| Accum. Depr.—Office Equipment | 200.00 | |||
| Accounts Payable | 1,000.00 | |||
| Wages Payable | 300.00 | |||
| Ed Major, Capital | 4,100.00 | |||
| Ed Major, Drawing | 900.00 | |||
| Advising Fees | 4,140.00 | |||
| Wages Expense | 700.00 | |||
| Advertising Expense | 90.00 | |||
| Rent Expense | 500.00 | |||
| Supplies Expense | 150.00 | |||
| Phone Expense | 67.00 | |||
| Electricity Expense | 48.00 | |||
| Insurance Expense | 89.00 | |||
| Gas and Oil Expense | 53.00 | |||
| Depr. Expense—Office Equipment | 200.00 | |||
| Miscellaneous Expense | 23.00 | |||
| 1,920.00 | 4,140.00 | 7,820.00 | 5,600.00 | |
| Net Income | 2,220.00 | 2,220.00 | ||
| 4,140.00 | 4,140.00 | 7,820.00 | 7,820.00 |
1. Enter the existing balance for each T account. Select Bal. and enter the amount.
3.
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