Journalize the following adjusting entries and prepare an adjusted trial balance as at December 31 2007 a. Supplies used during the period - $5000 b. All of the prepaid insurance expired at year end c. Depreciation expense – Building : $50,000 d. Depreciation expense – Furniture & Fixtures: $10,000 e. Accrued salary expense: $15,000 f. Unearned consultancy revenue at the end of the period: $10,000 2. Prepare the Income statement for the year ended December 31st, 2007 3. Prepare the Statement of owner’s equity for December 31st, 2007
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.
The following shows the unadjusted
Mark Wall Consulting Services
Trial Balance
as at December 31 2007
A/C Name Unadjusted Trial Balance
DR CR
Cash 60,000
Supplies 10,000
Prepaid Insurance 120,000
Buliding 500,000
Furniture and Fixtures 100,000
Accumulated depreciation - Furniture and Fittings 40,000
Accounts payable 20,000
Salary Payable
Unearned Consultancy revenue 80,000
Mark Wall, Capital 240,000
Mark Wall, Withdrawal 250,000
Consultancy revenue 625,000
Salary expense 160,000
Supplies Expense
Insurance Expense
Utilities Expense 25,000
Depreciation expense - Furniture and Fixtures
Depreciation expense - Building
Advertising expense 30,000
1,305,000 1,305,000
Requirements:
1. Journalize the following
a. Supplies used during the period - $5000
b. All of the prepaid insurance expired at year end
c. Depreciation expense – Building : $50,000
d. Depreciation expense – Furniture & Fixtures: $10,000
e. Accrued salary expense: $15,000
f. Unearned consultancy revenue at the end of the period: $10,000
2. Prepare the Income statement for the year ended December 31st, 2007
3. Prepare the Statement of owner’s equity for December 31st, 2007
4. Prepare the
5. Prepare the Closing entries as at December 31st, 2007
6. Prepare a Post-closing Trial Balance as at December 31st, 2007
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