From the adjusted trial balance that follows for Nelson Company, prepare a multiple-step income statement in the proper format for the current year. When completed, upload your file using pdf or doc only to this problem. Nelson Company Adjusted Trial Balance December 31, 20-- Debit Credit Cash $ 7,400 Merchandise Inventory 21,300 Store Supplies 3,700 Prepaid Insurance 3,800 Store Equipment 81,800 Accumulated Depreciation – Store Equipment $ 35,000 Accounts Payable 18,000 F. Worker, Capital 43,000 F. Worker, Withdrawals 2,000 Sales 227,100 Sales Discounts 1,000 Sales Returns and Allowances 5,000 Cost of Goods Sold 78,500 Salaries Expense (50% to each department) 63,000 Depreciation Expense – Store Equipment 3,000 Insurance Expense 2,800 Rent Expense (50% to each department) 26,000 Store Supplies Expense 6,000 Advertising Expense 17,800 Totals $323,100 $323,100
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.
From the adjusted
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Nelson Company Adjusted Trial Balance December 31, 20-- |
||
|
|
Debit |
Credit |
|
Cash |
$ 7,400 |
|
|
Merchandise Inventory |
21,300 |
|
|
Store Supplies |
3,700 |
|
|
Prepaid Insurance |
3,800 |
|
|
Store Equipment |
81,800 |
|
|
|
|
$ 35,000 |
|
Accounts Payable |
|
18,000 |
|
F. Worker, Capital |
|
43,000 |
|
F. Worker, Withdrawals |
2,000 |
|
|
Sales |
|
227,100 |
|
Sales Discounts |
1,000 |
|
|
Sales Returns and Allowances |
5,000 |
|
|
Cost of Goods Sold |
78,500 |
|
|
Salaries Expense (50% to each department) |
63,000 |
|
|
Depreciation Expense – Store Equipment |
3,000 |
|
|
Insurance Expense |
2,800 |
|
|
Rent Expense (50% to each department) |
26,000 |
|
|
Store Supplies Expense |
6,000 |
|
|
Advertising Expense |
17,800 |
|
|
Totals |
$323,100 |
$323,100 |
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