Complex Company prepares monthly financial statements. Below are listed some selected accounts and their balances in the September 30 trial balance before any adjustments have been made for the month of September. Instruction: Using the information given, prepare the adjusting entries that should be made by Complex Company on September 30. Complex COMPANY Trial Balance (Selected Accounts) September 30, 2010 Debit Credit Office Supplies....................................................................................$ 2,700 Prepaid Insurance..............................................................................$4,200 Office Equipment............................................................................. $16,200 Accumulated Depreciation—Office Equipment..............................................$1,000 Unearned Rent Revenue...........................................................................................$1,200 (Note: Debit column does not equal credit column because this is a partial listing of selected account balances) An analysis of the account balances by the company's accountant provided the following additional information: A physical count of office supplies revealed $1,000 on hand on September 30. A two-year life insurance policy was purchased on June 1 for $4,800. Office equipment depreciated $6,000 per year. The amount of rent received in advance that remains unearned at September 30 is $500.
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.
Complex Company prepares monthly financial statements. Below are listed some selected accounts and their balances in the September 30
Instruction: Using the information given, prepare the
Complex COMPANY
Trial Balance (Selected Accounts)
September 30, 2010
Debit Credit
Office Supplies....................................................................................$ 2,700
Prepaid Insurance..............................................................................$4,200
Office Equipment............................................................................. $16,200
Unearned Rent Revenue...........................................................................................$1,200
(Note: Debit column does not equal credit column because this is a partial listing of selected account balances)
An analysis of the account balances by the company's accountant provided the following additional information:
- A physical count of office supplies revealed $1,000 on hand on September 30.
- A two-year life insurance policy was purchased on June 1 for $4,800.
- Office equipment
depreciated $6,000 per year. - The amount of rent received in advance that remains unearned at September 30 is $500.
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