From the partial work sheet, prepare an income statement, a statement of owner's equity, and a classified balance sheet. The owner made no additional investments in the business during the month. Carlos Perez Delivery Service Work Sheet (Partial) For Month Ended January 31, 20-- Income Statement Balance Sheet Account Title Debit Credit Debit Credit Cash 11,000 Accounts Receivable 1,500 Supplies 1,200 Prepaid Insurance 800 Delivery Equipment 5,000 Accum. Depr.—Delivery Equip. 400 Accounts Payable 900 Wages Payable 1,400 Carlos Perez, Capital 15,600 Carlos Perez, Drawing 1,500 Consulting Fees 6,400 Wages Expense 880 Rent Expense 1,100 Supplies Expense 220 Telephone Expense 175 Electricity Expense 320 Insurance Expense 550 Depr. Exp.—Delivery Equip. 400 Miscellaneous Expense 55 3,700 6,400 21,000 18,300 Net Income 2,700 2,700 6,400 6,400 21,000 21,000
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 partial work sheet, prepare an income statement, a statement of owner's equity, and a classified
| Carlos Perez Delivery Service Work Sheet (Partial) For Month Ended January 31, 20-- |
||||
|---|---|---|---|---|
| Income Statement | Balance Sheet | |||
| Account Title | Debit | Credit | Debit | Credit |
| Cash | 11,000 | |||
| 1,500 | ||||
| Supplies | 1,200 | |||
| Prepaid Insurance | 800 | |||
| Delivery Equipment | 5,000 | |||
| Accum. Depr.—Delivery Equip. | 400 | |||
| Accounts Payable | 900 | |||
| Wages Payable | 1,400 | |||
| Carlos Perez, Capital | 15,600 | |||
| Carlos Perez, Drawing | 1,500 | |||
| Consulting Fees | 6,400 | |||
| Wages Expense | 880 | |||
| Rent Expense | 1,100 | |||
| Supplies Expense | 220 | |||
| Telephone Expense | 175 | |||
| Electricity Expense | 320 | |||
| Insurance Expense | 550 | |||
| Depr. Exp.—Delivery Equip. | 400 | |||
| Miscellaneous Expense | 55 | |||
| 3,700 | 6,400 | 21,000 | 18,300 | |
| Net Income | 2,700 | 2,700 | ||
| 6,400 | 6,400 | 21,000 | 21,000 |
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