Consider the following selected accounts from the records of Perez Enterprises at December 31, 2021: (Click the icon to view the selected accounts and balances.) Read the requirement. Begin by preparing the closing entries for Perez Enterprises. Record the entry to close out the revenue accounts. (Record debits first, then credits. Exclude explanations from any journal entries. Check your spelling carefully and do not abbreviate. Use only the account names provided in the problem statement.) Journal Entry Accounts Date (1) Dec Next, close out the expense accounts. Date 31 (2) Dec 31 Now close out the dividend account. Journal Entry Accounts Debit Debit Credit Credit Data table Cost of services sold Accumulated depreciation Selling, general, and administrative expenses Retained earnings, December 31, 2020 $ Print 14,100 Service revenue 41,400 Depreciation expense Other revenue 6.100 Dividends declared Income tax expense 1.900 Income tax payable Done $ 32,300 4,800 300 200 500 900 X
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.
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Closing Entries -
Closing entries are required to close the temporary accounts after making financials (Income statement and Balance sheet). Temporary accounts need to be closed because some items in the financial statements are temporary in nature that will not be carried forward to the next financial year.
Closing entries are required to close those accounts.
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