Crane Company ended its fiscal year on July 31, 2022. The company’s adjusted trial balance as of the end of its fiscal year is as follows. Crane Company Adjusted Trial Balance July 31, 2022 No. Account Titles Debit Credit 101 Cash $11,000 112 Accounts Receivable 8,700 157 Equipment 16,500 158 Accumulated Depreciation—Equip. $7,600 201 Accounts Payable 4,200 208 Unearned Rent Revenue 2,300 301 Owner’s Capital 45,600 306 Owner’s Drawings 15,600 400 Service Revenue 64,500 429 Rent Revenue 6,600 711 Depreciation Expense 7,300 726 Salaries and Wages Expense 56,700 732 Utilities Expense 15,000 $130,800 $130,800 Prepare the closing entries and post to Owner’s Capital and Income Summary accounts.
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.
Crane Company ended its fiscal year on July 31, 2022. The company’s adjusted
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Crane Company
Adjusted Trial Balance July 31, 2022 |
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No.
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Account Titles
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Debit
|
Credit
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|||
|
101
|
Cash
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$11,000
|
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112
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|
8,700
|
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157
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Equipment
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16,500
|
|
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|
158
|
|
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$7,600
|
|||
|
201
|
Accounts Payable
|
|
4,200
|
|||
|
208
|
Unearned Rent Revenue
|
|
2,300
|
|||
|
301
|
Owner’s Capital
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45,600
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|
306
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Owner’s Drawings
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15,600
|
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|
400
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Service Revenue
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|
64,500
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|
429
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Rent Revenue
|
|
6,600
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|
711
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Depreciation Expense
|
7,300
|
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|
726
|
Salaries and Wages Expense
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56,700
|
|
|||
|
732
|
Utilities Expense
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15,000
|
|
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$130,800
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$130,800
|
Prepare the closing entries and post to Owner’s Capital and Income Summary accounts.
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