Consider the unadjusted trial balance of Riverdale Company at June 30, 2016, and the related month-end adjustment data. Riverdale Company Trial Balance 30-Jun-16 Balance Debit Credit Cash 6,900 Accounts receivable 1,100 Prepaid rent 3,500 Supplies 1,100 Motor Vehicle 77,000 Accumulated depreciation 3,400 Accounts payable 3,300 Salary payable Riverdale, capital 80,000 Riverdale, drawing 4,400 Service revenue 9,600 Salary expense 1,500 Rent expense Fuel expense 800 Depreciation expense Supplies expense 96,300 96,300 Adjustment data at June 30 follow: Accrued service revenue at June 30, $1,500 $700 of the prepaid rent expired during the month. Supplies on hand at June 30, $700 Depreciation on motor vehicle for the month, $1,400. Accrued salary expense at June 30, $300 Requirement: From the information presented, prepare the adjusting entries for items 1-5 above and then prepare the company’s adjusted trial balance as at June 30, 2016 Prepare the income statement for the year ended June 30, 2016 Prepare the owner’s equity statement for June 30, 2016 Prepare the balance sheet as at June 30,2016
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.
Question on Unit 3
Consider the unadjusted
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Riverdale Company |
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Trial Balance |
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30-Jun-16 |
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Balance |
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Debit |
Credit |
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Cash |
6,900 |
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Accounts receivable |
1,100 |
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Prepaid rent |
3,500 |
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Supplies |
1,100 |
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Motor Vehicle |
77,000 |
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3,400 |
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Accounts payable |
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3,300 |
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Salary payable |
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Riverdale, capital |
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80,000 |
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Riverdale, drawing |
4,400 |
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Service revenue |
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9,600 |
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Salary expense |
1,500 |
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Rent expense |
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Fuel expense |
800 |
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Depreciation expense |
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Supplies expense |
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96,300 |
96,300 |
Adjustment data at June 30 follow:
- Accrued service revenue at June 30, $1,500
- $700 of the prepaid rent expired during the month.
- Supplies on hand at June 30, $700
- Depreciation on motor vehicle for the month, $1,400.
- Accrued salary expense at June 30, $300
Requirement:
- From the information presented, prepare the
adjusting entries for items 1-5 above and then prepare the company’s adjusted trial balance as at June 30, 2016 - Prepare the income statement for the year ended June 30, 2016
- Prepare the owner’s equity statement for June 30, 2016
- Prepare the balance sheet as at June 30,2016
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