I. Mr. J. Strom is the owner of a hardware store in Shelburne, Nova Scotia. At the end of the year, he attempted to prepare a trial balance of the accounts in the general ledger. The trial balance appears below. The balances them- selves are correct but Mr. Strom has no knowledge of double-entry book- keeping so he has made many errors in listing the balances. J. STROM TRIAL BALANCE DECEMBER 31, 20- Debit Credit Bank 3 000 Land 250 000 A/R - Jones Supplies Office Equipment 10 940 3 400 15 350 Automobile 21 200 Building A/P - Smith 240 000 5 160 Bank Loan 52 000 J. Strom, Capital Mortgage Payable 208 230 278 500 570 870 516 910 Find the errors and prepare a corrected trial balance. Assume that no exceptional balances exist from overpayments.
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.
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