Fuzzy Button Clothing Company is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheets for Fuzzy Button Clothing Company for the years ending December 31, Year 2 and 1, respectively.
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.
![2. Balance sheet
The balance sheet provides a snapshot of the financial condition of a company. Investors and analysts use the information given on the balance
sheet and other financial statements to make several interpretations regarding the company's financial condition and performance.
Fuzzy Button Clothing Company is a hypothetical company. Suppose it has the following balance sheet items reported at the end of its first year of
operation. For the second year, some parts are still incomplete. Use the information given to complete the balance sheets for Fuzzy Button Clothing
Company for the years ending December 31, Year 2 and 1, respectively.
Fuzzy Button Clothing Company
Balance Sheet
For the Year ended December 31
Year 2
Year 1
Year 2
Year 1
Assets
Liabilities and equity
Current assets:
Current liabilities:
Cash and equivalents
$55,350
Accounts payable
$0
$0
Accounts receivable
$25,313
$20,250
Accruals
$3,516
$0
Inventories
$74,250
$59,400
Notes payable
$19,921
$18,750
Total current assets
$168,750
$135,000 Total current liabilities
$18,750
Net fixed assets:
Long-term debt
$70,313
$56,250
Net plant and equipment
$165,000 Total debt
$93,750
$75,000
Common equity:
Common stock
$182,813
$146,250
Retained earnings
$78,750
Total common equity
Total assets
$375,000
$300,000 Total liabilities and equity
$281,250
$375,000
$225,000
$300,000
Given the information in the preceding balance sheet-and assuming that Fuzzy Button Clothing Company has 50 million shares of common stock
outstanding-read each of the following statements, then identify the selection that best interprets the information conveyed by the balance sheet.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7cac9678-2996-413a-884c-ba79e8efe79d%2F2479eb34-b49b-4886-afe6-6586a76f0c96%2Foltp1w_processed.png&w=3840&q=75)
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