Fick Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report. NOT: retained eranings = net profit, dividends = withdrawal FICK PSYCHOLOGICAL SERVICES, INC. Income Statement For the year ended December 31, current year Revenue: Counseling revenue $ 250,000 Expenses: Advertising expense $ 1,900 Salaries expense 92,000 Office supplies expense 1,400 Utilities expense 850 Malpractice insurance expense 6,000 Office rent expense 30,000 Continuing education expense 3,550 Depreciation expense: fixtures 3,000 Miscellaneous expense 6,000 Income taxes expense 39,500 184,200 Net income $ 65,800 Fick’s statement of retained earnings indicates that a $8,000 cash dividend was declared and paid during the current year. a. Prepare the necessary closing entries on December 31 of the current year. b. If Fick’s Retained earnings account had a $99,000 balance on at the beginning of the current year, at what amount should Retained Earnings be reported in the firm's year-end balance sheet dated December 31? --------------------------------------------------------------------------------- 1 Record the entry to close the revenue account. 2 Record the entry to close expense accounts. 3 Record the transfer of Net income/loss. 4 Record the entry to close dividends. Journal entry worksheet Record the entry to close the revenue account. Note: Enter debits before credits. Transaction General Journal Debit Credit 1
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.
Fick Psychological Services, Inc., closes its temporary accounts once each year on December 31. The company recently issued the following income statement as part of its annual report.
NOT: retained eranings = net profit, dividends = withdrawal
| FICK PSYCHOLOGICAL SERVICES, INC. | |||||||
| Income Statement | |||||||
| For the year ended December 31, current year | |||||||
| Revenue: | |||||||
| Counseling revenue | $ | 250,000 | |||||
| Expenses: | |||||||
| Advertising expense | $ | 1,900 | |||||
| Salaries expense | 92,000 | ||||||
| Office supplies expense | 1,400 | ||||||
| Utilities expense | 850 | ||||||
| Malpractice insurance expense | 6,000 | ||||||
| Office rent expense | 30,000 | ||||||
| Continuing education expense | 3,550 | ||||||
| 3,000 | |||||||
| Miscellaneous expense | 6,000 | ||||||
| Income taxes expense | 39,500 | 184,200 | |||||
| Net income | $ | 65,800 | |||||
Fick’s statement of
a. Prepare the necessary closing entries on December 31 of the current year.
b. If Fick’s Retained earnings account had a $99,000 balance on at the beginning of the current year, at what amount should Retained Earnings be reported in the firm's year-end
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1Record the entry to close the revenue account.
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2Record the entry to close expense accounts.
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3Record the transfer of Net income/loss.
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4Record the entry to close dividends.
- Record the entry to close the revenue account.
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- Required A
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