Closing Entries Using Periodic Inventory System United Rug Company is a small rug retailer owned and operated by Pat Kirwan. After the accounts have been adjusted on January 31, the following selected account balances were taken from the ledger: Advertising Expense $36,080 Depreciation Expense 39,580 Dividends 67,200 Freight In 13,570 Inventory, January 1 374,950 Inventory, January 31 464,050 Miscellaneous Expense 9,410 Purchases 1,755,000 Purchases Discounts 33,160 Purchases Returns and Allowances 45,540 Salaries Expense 377,000 Sales 2,220,500 The estimated cost of merchandise returns from January sales is $20,000. Journalize the closing entries on January 31 in the order as presented in the chapter. For a compound transaction, if an amount box does not require an entry, leave it blank.
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 Using Periodic Inventory System
United Rug Company is a small rug retailer owned and operated by Pat Kirwan. After the accounts have been adjusted on January 31, the following selected account balances were taken from the ledger:
| Advertising Expense | $36,080 |
| 39,580 | |
| Dividends | 67,200 |
| Freight In | 13,570 |
| Inventory, January 1 | 374,950 |
| Inventory, January 31 | 464,050 |
| Miscellaneous Expense | 9,410 |
| Purchases | 1,755,000 |
| Purchases Discounts | 33,160 |
| Purchases Returns and Allowances | 45,540 |
| Salaries Expense | 377,000 |
| Sales | 2,220,500 |
The estimated cost of merchandise returns from January sales is $20,000.
Journalize the closing entries on January 31 in the order as presented in the chapter.
For a compound transaction, if an amount box does not require an entry, leave it blank.
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