Enterprises is owned by Edmund Wilson and has a January 31 fiscal year end. The company prepares adjusting entries on an annual basis. The following trial balance was prepared before adjustments: Cash Service revenue Rent expense Salaries expense Telephone expense Accounts receivable Prepaid insurance Supplies Equipment Accumulated depreciation-equipment Accounts payable Notes payable Unearned revenue E. Wilson, capital E. Wilson, drawings Additional information: 1. 2. 3. 4. 5. 6. 7. ENTERPRISES 8. Trial Balance January 31, 2024 Debit $4.990 14,510 4,560 6,520 31,300 118,000 20,760 66.750 2,910 $270,300 Credit $12,520 7,710 12,000 7,420 18.320 212,330 $270,300 A one-year insurance policy was purchased on July 1, 2023. A count of supplies on January 31, 2024, shows $940 of supplies on hand. The equipment has an estimated useful life of five years. An analysis of the Unearned Revenue account shows that $5,370 of the services had been provided by January 31, 2024. The eight-month, 7% note was issued on November 1, 2023. Interest and principal are due on the maturity date. Salaries accrued to January 31, 2024, were $1,275. On January 31, 2024, the company had provided services but not billed or recorded service revenue of $2,675. The telephone bill for January 2024 was $165. It has not been recorded or paid. (Use the Accounts Payable account.)
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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