Flora Tea Company began operations on January 1, 2022. Flora's adjusted trial balance at December 31, 2022 is as follows: a. Journalize and post the necessary closing entries. Omit explanations. b. Prepare a post-closing trial balance as of December 31. First, journalize the necessary closing entries (CJE).(Record debits first, then credits. Exclude explanations from any journal entries.) CJE1: Start by closing revenues. Account Flora Tea Company Adjusted Trial Balance At December 31, 2022 Account Debit Credit Cash $371,530 Accounts Receivable 113,000 Supplies 11,000 Prepaid Rent 3,000 Equipment 49,000 Accumulated Depreciation—Equipment $3,500 Accounts Payable 6,500 Interest Payable 1,225 Wages Payable 59,000 Notes Payable 49,000 Common Stock 125,000 Dividends 24,000 Sales Revenue 503,000 Interest Expense 2,695 Supplies Expense 21,000 Rent Expense 15,000 Depreciation Expense—Equipment 3,500 Wage Expense 119,000 Utilities Expense 14,500 Total $747,225 $747,225
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.
b. Prepare a post-closing trial balance as of December 31.
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Account
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Flora Tea Company
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Adjusted Trial Balance
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At December 31, 2022
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Account
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Debit
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Credit
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Cash
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$371,530
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113,000
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Supplies
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11,000
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Prepaid Rent
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3,000
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Equipment
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49,000
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$3,500
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Accounts Payable
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6,500
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Interest Payable
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1,225
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Wages Payable
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59,000
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Notes Payable
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49,000
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Common Stock
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125,000
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Dividends
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24,000
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Sales Revenue
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503,000
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Interest Expense
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2,695
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Supplies Expense
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21,000
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Rent Expense
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15,000
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Depreciation Expense—Equipment
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3,500
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Wage Expense
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119,000
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Utilities Expense
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14,500
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Total
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$747,225
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$747,225
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