following information is available to assist in the preparation of adjusting entries: MM Cafe Trial Balance December 31, 2021 Debit (RM) Credit (RM) Cash 1,300 Account receivable Supplies Prepaid rent Prepaid Insurance Equipment Accumulated depreciation- equipment Account payable Unearned internet fees 700 200 400 600 9,100 400 500 900 Common stock 1,500 1,000 Retained earnings Dividends Internet fees 8,000 22,700 Wage expenses Rent expenses Utility expenses 3,500 2,000 1,200 Total RM 27,000 RM 27,000 The following information is available to assist in the preparation of adjusting entries: a. An inventory of supplies reveals RM100 still on hand. b. Prepaid insurance consists of a two-year policy purchased on July 1, 2021. c. Depreciation on equipment is estimated to be RM 500. d. Accrued wages are RM100 on December 31. e. Accrued utility expenses RM 300. f. One-third of the unearned internet fees have been earned by December 31. g. Management estimates income taxes for the year to be RM 2,500. Instructions (a) Prepare the adjusting entries. (b) Prepare the adiusted trial balance.
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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