December 31, 2021 Account Title Debits Credits Cash 65,000 Accounts receivable 160,000 285,000 148,000 Inventory Prepaid expenses Equipment Accumulated depreciation 320,000 110,000 Investments 140,000 Accounts payable Interest payable 60,000 20,000 Deferred revenue 80,000 Income Taxes payable Notes payable 30,000 200,000 16,000 400,000 202,000 1,118,000 Allowance for uncollectible accounts Common stock Retained earnings Totals 1,118,000 Additional Information: Prepaid 2 year lease paid on 12/31/2021 Treasury bills purchased 11/30/2021 Treasury bill maturity Investments intended for sale next year |Prepaid subscriptions of 1 year or less $ 120,000 30,000 1/30/2022 $ 110,000 80,000 Note due in six months Note due in six years Note due in three annual installments Annual installment amount 40,000 $ 100,000 60,000 20,000 Shares of no par common stock 400,000 800,000 Shares of common stock authorized SSSS SS
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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