Kazz Industries' year-end is May 31. Based on an analysis of the unadjusted trial balance at May 31, 2020. th following information was available: Problem 3-7B Adjusting entries (annual) LO4 4. Machinery costing $77,500 was acquired on September 1 of this accounting period. It is estimated te have a useful life of six years. The machinery is estimated to have a $5,500 value at the end of it six-year life. b. Accrued revenues at year-end totalled $24,300. C. The Prepaid Insurance account showed a balance of $23.040. This was paid and takes effect on March 1 of this accounting period and represents a two-year policy. d. Accrued salaries at year-end were $21,500. e. One month of interest had accrued at a rate of 3.5% on the $144,000 note payable. f. The annual depreciation on the office equipment was $8,100. g. $6,480 worth of advertising was prepaid on January 1 of the current accounting period and debited to the Prepaid Advertising account. This covered four months of advertising beginning on the same date. h. It was determined that $4,500 of completed work was included in the $9,200 Unearned Revenue account balance at year-end. Interest income accrued at year-end totalled $570. The Office Supplies account had a balance of $4,000 at the beginning of the accounting period. During the year, $29,500 of supplies were purchased and debited to the Office Supplies account. At year-end, a count of the supplies revealed that $28,400 had been used.
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
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
