FAITH Company presented the following information pertaining to accounts that will need adjustments for its November 30, 2020 year-end financial statements: a. On Oct. 1, 2020, Faith Company paid $10,800 for 6-months’ insurance premiums. Debited Insurance Expense for the amount paid. b. The balance in the ledger account Office Supplies amounted to $32,000. A count of the office supplies on hand as of Nov. 30, 2020 totaled $12,800. c. Faith Company received $22,800 on Nov. 1, 2020 from a customer for future services to be rendered during the months of November, December, January, and February. d. Faith acquired Office Equipment costing $355,000 on April 1, 2020. The equipment is expected to last 5 years after which it will have a salvage value of $2,200. e. Assume that Nov. 30, 2020 is a Thursday and that Faith pays its employees a total of $87,500 every Fridays for a 5-day working week. Required: Prepare the necessary adjusting entries for Faith Company at November 30, 2020
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.
FAITH Company presented the following information pertaining to accounts that will need adjustments for
its November 30, 2020 year-end financial statements:
a. On Oct. 1, 2020, Faith Company paid $10,800 for 6-months’ insurance premiums. Debited Insurance
Expense for the amount paid.
b. The balance in the ledger account Office Supplies amounted to $32,000. A count of the office
supplies on hand as of Nov. 30, 2020 totaled $12,800.
c. Faith Company received $22,800 on Nov. 1, 2020 from a customer for future services to be rendered
during the months of November, December, January, and February.
d. Faith acquired Office Equipment costing $355,000 on April 1, 2020. The equipment is expected to last
5 years after which it will have a salvage value of $2,200.
e. Assume that Nov. 30, 2020 is a Thursday and that Faith pays its employees a total of $87,500 every
Fridays for a 5-day working week.
Required: Prepare the necessary
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