Company information: Above is the unadjusted trial balance for Rock Bottom Harbor Clothing Corporation. They are a calendar year corporation. They close their books on December 31st of every year. A. Prepare adjusting journal entries for the following. 1. Equipment is depreciated based on a 8-year life. The equipment has no salvage value. It was purchased on January 1, 2015. 2. The bad debt expense is estimated to be $1,450. They use the percentage of sales method allowed by GAAP. 3. The insurance was prepaid on January 1, 2018. It covers the period from January 1, 2018 thru December 31, 2019. 4. The sales team worked the last week in December, but will not be paid until January 5th. They earned $2,750 for the 5 days of work. 5. The note payable is due next July (short term). The interest that has accrued on the loan is $1,850, but has not been paid or recorded as of December 21, 2018. 6. Advertising was paid in advance on November 1, 2018. The amount was $1,100. The company plans to do a large spread, magazine advertisement on January 15, 2019. A new staff account inadvertantly charged the full amount to expense. 7. Office supplies on hand totaled $900. That same inexperienced staff accountant had charged the full $4,200 to expense even though all of the supplies had not been used at December 31. 8. After an inventory count at year end, the staff accountant noted that the inventory market value was lower than what was on the books (cost). Market value is $68,250 on December 31. 9. The rent was paid in advance, for the full year, on January 1, 2018. Trial Balance December 31, 2018 Debit Credit Cash $ 22,500 Accounts Receivable 17,350 Allowance for Doubtful Accounts $ 600 Inventory, December 31 70,350 Prepaid Insurance 5,200 Prepaid Rent 15,000 Equipment 60,000 Accumulated Depreciation- Eqpuipment 22,500 Accounts Payable 17,000 Notes Payable 25,000 Common Stock 10,000 Retained Earnings 92,450 Sales Revenue 397,300 Cost of Goods Sold 207,400 Salaries Expense (sales) 59,850 Advertising Expense 26,700 Salaries Expense (administration) 76,300 Supplies Expense 4,200 Total $ 564,850 $ 564,850
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.
Company information: Above is the unadjusted
| A. Prepare |
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| 1. Equipment is |
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| 2. The |
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| 3. The insurance was prepaid on January 1, 2018. It covers the period from January 1, 2018 thru December 31, 2019. | |||||||||||
| 4. The sales team worked the last week in December, but will not be paid until January 5th. They earned $2,750 for the 5 days of work. | |||||||||||
| 5. The note payable is due next July (short term). The interest that has accrued on the loan is $1,850, but has not been paid or recorded as of December 21, 2018. | |||||||||||
| 6. Advertising was paid in advance on November 1, 2018. The amount was $1,100. The company plans to do a large spread, magazine advertisement on January 15, 2019. | |||||||||||
| A new staff account inadvertantly charged the full amount to expense. | |||||||||||
| 7. Office supplies on hand totaled $900. That same inexperienced staff accountant had charged the full $4,200 to expense even though all of the supplies had not been used at December 31. | |||||||||||
| 8. After an inventory count at year end, the staff accountant noted that the inventory market value was lower than what was on the books (cost). Market value is $68,250 on December 31. | |||||||||||
| 9. The rent was paid in advance, for the full year, on January 1, 2018. |
| Trial Balance | ||||||
| December 31, 2018 | ||||||
| Debit | Credit | |||||
| Cash | $ 22,500 | |||||
| 17,350 | ||||||
| Allowance for Doubtful Accounts | $ 600 | |||||
| Inventory, December 31 | 70,350 | |||||
| Prepaid Insurance | 5,200 | |||||
| Prepaid Rent | 15,000 | |||||
| Equipment | 60,000 | |||||
| 22,500 | ||||||
| Accounts Payable | 17,000 | |||||
| Notes Payable | 25,000 | |||||
| Common Stock | 10,000 | |||||
| 92,450 | ||||||
| Sales Revenue | 397,300 | |||||
| Cost of Goods Sold | 207,400 | |||||
| Salaries Expense (sales) | 59,850 | |||||
| Advertising Expense | 26,700 | |||||
| Salaries Expense (administration) | 76,300 | |||||
| Supplies Expense | 4,200 | |||||
| Total | $ 564,850 | $ 564,850 | ||||
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