Consider the following unadjusted account balances for the year ended December 31, 2022, as prepared by the bookkeeper of Something-Wrong Inc. The bookkeeper is new to the job and prepared the trial balance listing in alphabetical account name order (assume accounts have normal balances). Accounts payable ..................................................... $ 9,500 Accounts receivable ................................................. 14,260 Cash .......................................................................... 22,222 Share capital (Common shares) ............................... 30,000 Dividends.................................................................. 5,000 Equipment................................................................ 12,000 Prepaid insurance..................................................... 25,444 Land.......................................................................... 20,000 Notes payable (due next month) ............................. 25,300 Retained earnings..................................................... 12,815 Insurance expense.................................................... 12,689 Service revenue........................................................ 89,550 Supplies inventory.................................................... 2,750 Salaries expense....................................................... 53,500 Salaries payable........................................................ 700 Requirements: 1. Prepare the adjusting journal entry given that the remaining unpaid salaries due to employees at the end of the period is $2,000. 2. Prepare the adjusting journal entry given that the Accrued Interest Payable with on the note payable at the end of the period is $1,490. 3. Prepare the adjusting journal entry given that the insurance still unexpired/unused at the end of the period is $12,000. 4. Equipment was recently purchased, so there is neither depreciation expense nor accumulated depreciation recorded in the accounting records yet. The equipment is expected to have a 8 year useful life, and a residual value of $1,400. Prepare the adjusting journal entry to record the depreciation for the 2022 fiscal year. 5. Prepare a corrected adjusted trial balance as at December 31, 2022 from the above account information, and consider the adjustment data provided from the adjusting journal entries.
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.
Consider the following unadjusted account balances for the year ended December 31, 2022, as prepared
by the bookkeeper of Something-Wrong Inc. The bookkeeper is new to the job and prepared the
balance
Accounts payable ..................................................... $ 9,500
Accounts receivable ................................................. 14,260
Cash .......................................................................... 22,222
Share capital (Common shares) ............................... 30,000
Dividends.................................................................. 5,000
Equipment................................................................ 12,000
Prepaid insurance..................................................... 25,444
Land.......................................................................... 20,000
Notes payable (due next month) ............................. 25,300
Retained earnings..................................................... 12,815
Insurance expense.................................................... 12,689
Service revenue........................................................ 89,550
Supplies inventory.................................................... 2,750
Salaries expense....................................................... 53,500
Salaries payable........................................................ 700
Requirements:
1. Prepare the
the end of the period is $2,000.
2. Prepare the adjusting journal entry given that the Accrued Interest Payable with on the note
payable at the end of the period is $1,490.
3. Prepare the adjusting journal entry given that the insurance still unexpired/unused at the end of
the period is $12,000.
4. Equipment was recently purchased, so there is neither
depreciation
useful life, and a residual value of $1,400. Prepare the adjusting journal entry to record the
depreciation for the 2022 fiscal year.
5. Prepare a corrected adjusted trial balance as at December 31, 2022 from the above account
information, and consider the adjustment data provided from the adjusting journal entries.
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