Comprehensive Problem: Reviewing the Accounting Cycle Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2022 were: Cash $ 2,200 Accounts Payable $ 23,700 Accounts Receivable 4,400 Income Tax Payable 15,100 Supplies (Feed and Straw) 27,800 Interest Payable 2,700 Land 167,000 Wages Payable 14,200 Buildings 115,000 Notes Payable (due in 2026) 60,000 Accumulated Depreciation (Buildings) 36,000 Common Shares 150,000 Equipment 57,000 Retained Earnings, 12/31/2021 55,200 Accumulated Depreciation (Equipment) 16,500 During 2022, the following transactions occurred: Talbot provided animal care services, all on credit, for $210,300. Talbot rented stables to customers for $20,500 cash. Talbot rented its grounds to individual riders, groups, and show organizations for $41,800 cash. There remains $15,600 of accounts receivable to be collected at December 31, 2022. Feed in the amount of $62,900 was purchased on credit and debited to the supplies account. Straw was purchased for $7,400 cash and debited to the supplies account. Wages payable at the beginning of 2022 were paid early in 2022. Wages were earned and paid during 2022 in the amount of $112,000. The income tax payable at the beginning of 2022 was paid early in 2022. Payments of $73,000 were made to creditors for supplies previously purchased on credit. One year's interest at 9% was paid on the notes payable on July 1, 2022. During 2022, Jon Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost $7,000, and Talbot used his personal credit to purchase it. Property taxes were paid on the land and buildings in the amount of $17,000. Dividends were declared and paid in the amount of $7,200. The following data are available for adjusting entries: Supplies (feed and straw) in the amount of $30,400 remained unused at year-end. Annual depreciation on the buildings is $6,000. Annual depreciation on the equipment is $5,500. Wages of $4,000 were unrecorded and unpaid at year-end. Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end. Income taxes of $16,500 were unpaid and unrecorded at year-end. Required: 1. Post the 2022 beginning balances to T-accounts. Prepare journal entries for transactions a through k and post the journal entries to T-accounts, adding any new T-accounts you need. If no entry is required, select "No entry required" and leave the amount boxes blank. For a compound transaction, if those boxes in which no entry is required, leave the box blank. Enter amounts in the same order as given in the list of transactions. 2. Prepare the adjustments and post the adjustments to the T-accounts. Note: For the T-accounts, be sure to complete the posting requirements from part 1 first. 3. Prepare a statement of earnings. 4. Prepare a statement of retained earnings. 5. Prepare a classified statement of financial position. 6. Prepare closing entries. For those boxes in which no entry is required, leave the box blank. 7. CONCEPTUAL CONNECTION: Did you include transaction i among Talbot's 2022 journal entries? Why or why not? The input in the box below will not be automatically graded, but may be reviewed and considered by your instructor.
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.
Comprehensive Problem: Reviewing the Accounting Cycle
Talbot Riding Stables provides stables, care for animals, and grounds for riding and showing horses. The account balances at the beginning of 2022 were:
| Cash | $ 2,200 | Accounts Payable | $ 23,700 | |
| 4,400 | Income Tax Payable | 15,100 | ||
| Supplies (Feed and Straw) | 27,800 | Interest Payable | 2,700 | |
| Land | 167,000 | Wages Payable | 14,200 | |
| Buildings | 115,000 | Notes Payable (due in 2026) | 60,000 | |
| 36,000 | Common Shares | 150,000 | ||
| Equipment | 57,000 | 55,200 | ||
| Accumulated Depreciation (Equipment) | 16,500 |
During 2022, the following transactions occurred:
- Talbot provided animal care services, all on credit, for $210,300. Talbot rented stables to customers for $20,500 cash. Talbot rented its grounds to individual riders, groups, and show organizations for $41,800 cash.
- There remains $15,600 of accounts receivable to be collected at December 31, 2022.
- Feed in the amount of $62,900 was purchased on credit and debited to the supplies account.
- Straw was purchased for $7,400 cash and debited to the supplies account.
- Wages payable at the beginning of 2022 were paid early in 2022. Wages were earned and paid during 2022 in the amount of $112,000.
- The income tax payable at the beginning of 2022 was paid early in 2022.
- Payments of $73,000 were made to creditors for supplies previously purchased on credit.
- One year's interest at 9% was paid on the notes payable on July 1, 2022.
- During 2022, Jon Talbot, a principal shareholder, purchased a horse for his wife, Jennifer, to ride. The horse cost $7,000, and Talbot used his personal credit to purchase it.
- Property taxes were paid on the land and buildings in the amount of $17,000.
- Dividends were declared and paid in the amount of $7,200.
The following data are available for
- Supplies (feed and straw) in the amount of $30,400 remained unused at year-end.
- Annual depreciation on the buildings is $6,000.
- Annual depreciation on the equipment is $5,500.
- Wages of $4,000 were unrecorded and unpaid at year-end.
- Interest for six months at 9% per year on the note is unpaid and unrecorded at year-end.
- Income taxes of $16,500 were unpaid and unrecorded at year-end.
Required:
1. Post the 2022 beginning balances to T-accounts. Prepare
2. Prepare the adjustments and post the adjustments to the T-accounts. Note: For the T-accounts, be sure to complete the posting requirements from part 1 first.
3. Prepare a statement of earnings.
4. Prepare a statement of retained earnings.
5. Prepare a classified statement of financial position.
6. Prepare closing entries. For those boxes in which no entry is required, leave the box blank.
7. CONCEPTUAL CONNECTION: Did you include transaction i among Talbot's 2022 journal entries?
Why or why not?
The input in the box below will not be automatically graded, but may be reviewed and considered by your instructor.
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