H Company's unadjusted trial balance for the current year follows: H Company Trial Balance December 31 Cash Prepaid property insurance Prepaid life insurance Shop supplies Shop equipment Accumulated depreciation - equipment Building Accumulated depreciation-building $7,200 2,400 3,000 790 3,860 $770 59,500 3,840 Land Unearned rent 55,000 Accounts payable Long-term notes payable Common stock Retained earnings Rent earned Fees earned Wages expense Utilities expense Property taxes expense Interest expense Total 7,600 3,720 50,000 1,000 47,860 2,400 23,400 3,200 690 600 4,350 $140,590 $140,590 Additional information: a) A life insurance policy examination showed $1,040 of expired insurance. b) An inventory count showed $210 of unused shop supplies still available. c) Depreciation expense on shop equipment, $350. d) Depreciation expense on the building, $2,020. e) A beautician is behind on space rental payments, and this $200 of accrued revenues was unrecorded at the time the trial balance was prepared. f) $2,800 of the Unearned Rent account balance was still unearned by year-end. g) The one employee, a receptionist, works a five-day workweek at $50 per day. The employee was paid last week but has worked Tuesday through Friday this week for which she has not been paid. h) Three months' property taxes, totaling $450, have accrued. This additional amount of property taxes expense has not been recorded. i) One month's interest on the note payable, $600, has accrued but is unrecorded. j) The Prepaid Property Insurance account has a $2,400 debit balance before adjustment. An examination of insurance policies shows $950 of unexpired insurance. k) The company has three office employees who each earn $100 per day for a five-day workweek that ends on Friday. The employees were paid last Friday and worked full days on Monday, Wednesday and Friday this week for which they have not been paid. I) On November 1, the company received 6 months' rent in advance from a tenant whose rent is $700 per month. The $4,200 was credited to the Unearned Rent account. m) The company has not received a water and sewer services bill for December. Based on prior months' bills, the bill is expected to be $1,000 for the month.
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.
Prepare Post closing
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