Following is a trial balance of ABC Company for the year ended December 31, 2018. Dr Cr Cash 14,500 Accumulated Depreciation-Equipment 18,000 Accounts Receivable 11,100 Notes Payable 25,000 Inventory 29,000 Accounts Payable 10,600 Prepaid Insurance 2,500 Owner's Capital 81,000 Equipment 95,000 Sales Revenue 536,800 Owner's drawings 12,000 Other Revenue and Gains 2,500 Sales Returns and Allowances 6,700 Sales Discounts 5,000 Cost of Goods Sold 363,400 Transportation expense 7,600 Advertising Expense 12,000 Salaries Expense 56,000 Utilities Expense 18,000 Rent Expense 24,000 Depreciation Expense 9,000 Insurance Expense 4,500 Interest Expense 3,600 Total 673,900 Total 673,900 Required: Prepare a Multiple-Step Income Statement.
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.
Following is a
|
Dr |
Cr |
||
|
Cash |
14,500 |
|
18,000 |
|
|
11,100 |
Notes Payable |
25,000 |
|
Inventory |
29,000 |
Accounts Payable |
10,600 |
|
Prepaid Insurance |
2,500 |
Owner's Capital |
81,000 |
|
Equipment |
95,000 |
Sales Revenue |
536,800 |
|
Owner's drawings |
12,000 |
Other Revenue and Gains |
2,500 |
|
Sales Returns and Allowances |
6,700 |
||
|
Sales Discounts |
5,000 |
|
|
|
Cost of Goods Sold |
363,400 |
|
|
|
Transportation expense |
7,600 |
|
|
|
Advertising Expense |
12,000 |
|
|
|
Salaries Expense |
56,000 |
|
|
|
Utilities Expense |
18,000 |
|
|
|
Rent Expense |
24,000 |
|
|
|
Depreciation Expense |
9,000 |
|
|
|
Insurance Expense |
4,500 |
|
|
|
Interest Expense |
3,600 |
|
|
|
Total |
673,900 |
Total |
673,900 |
Required:
Prepare a Multiple-Step Income Statement.
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