Fred Schwartz Dance Studio, Inc. adjusts its accounts monthly. This is the studio’s unadjusted trial balance dated December 31, 2002. FRED SCHWARTZ DANCE STUDIO, INC. Trial Balance December 31, 2002 Debits Credits Cash....................................................................................... $ 10,800 Client’s fees receivable.......................................................... 58,000 Supplies.................................................................................. 7,000 Prepaid studio rent................................................................. 50,000 Studio equipment................................................................... 96,000 Accumulated depreciation: studio equipment....................... $ 45,000 Accounts payable................................................................... 7,000 Notes payable........................................................................ 25,000 Interest payable...................................................................... 500 Unearned client fees.............................................................. 10,000 Income taxes payable............................................................. 3,000 Capital stock.......................................................................... 70,000 Client fees earned.................................................................. 87,000 Supply expense...................................................................... 6,000 Salary expense....................................................................... 9,000 Interest expense .................................................................... 500 Studio rent expense............................................................... 0 Utilities expense..................................................................... 4,200 Depreciation expense: studio equipment............................... 0 Income taxes expense............................................................ 6,000 ________ $247,500 $247,500 Other data Supplies on hand at December 31, 2002, total $2,500. The studio pays rent quarterly (every 3 months). The last payment was made November 1, 2002. The next payment will be made early in February 2003. Studio equipment is being depreciated over 96 months (8 years). $250 Interest is yet to be paid. At December 31, 2002, $4,000 of previously unearned client fees had been earned. Accrued, but unrecorded and uncollected client fees earned total $700 at Dec 31 Accrued, but unrecorded and unpaid salary expense totals $900 at December 31. Required: Prepare a 10-column work sheet utilizing the trial balance and adjustments shown above. Also record adjusting and closing entries
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.
.1: Fred Schwartz Dance Studio, Inc. adjusts its accounts monthly. This is the studio’s unadjusted
FRED SCHWARTZ DANCE STUDIO, INC.
Trial Balance
December 31, 2002
Debits Credits
Cash....................................................................................... $ 10,800
Client’s fees receivable.......................................................... 58,000
Supplies.................................................................................. 7,000
Prepaid studio rent................................................................. 50,000
Studio equipment................................................................... 96,000
Accounts payable................................................................... 7,000
Notes payable........................................................................ 25,000
Interest payable...................................................................... 500
Unearned client fees.............................................................. 10,000
Income taxes payable............................................................. 3,000
Capital stock.......................................................................... 70,000
Client fees earned.................................................................. 87,000
Supply expense...................................................................... 6,000
Salary expense....................................................................... 9,000
Interest expense .................................................................... 500
Studio rent expense............................................................... 0
Utilities expense..................................................................... 4,200
Depreciation expense: studio equipment............................... 0
Income taxes expense............................................................ 6,000 ________
$247,500 $247,500
Other data
- Supplies on hand at December 31, 2002, total $2,500.
- The studio pays rent quarterly (every 3 months). The last payment was made November 1, 2002. The next payment will be made early in February 2003.
- Studio equipment is being
depreciated over 96 months (8 years). - $250 Interest is yet to be paid.
- At December 31, 2002, $4,000 of previously unearned client fees had been earned.
- Accrued, but unrecorded and uncollected client fees earned total $700 at Dec 31
- Accrued, but unrecorded and unpaid salary expense totals $900 at December 31.
Required:
- Prepare a 10-column work sheet utilizing the trial balance and adjustments shown above.
- Also record adjusting and closing entries
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