Len Kumar started his own consulting firm, Kumar Consulting, on June 1, 2017. The trial balance at June 30 is as follows. KUMAR CONSULTING Trial Balance June 30, 2017 Debit Credit Cash $ 6,850 Accounts Receivable 7,000 Supplies 2,007 Prepaid Insurance 2,160 Equipment 15,000 Accounts Payable $ 4,245 Unearned Service Revenue 5,200 Common Stock 22,007 Service Revenue 8,300 Salaries and Wages Expense 4,000 Rent Expense 2,735 $39,752 $39,752 In addition to those accounts listed on the trial balance, the chart of accounts for Kumar also contains the following accounts: Accumulated Depreciation—Equipment, Salaries and Wages Payable, Depreciation Expense, Insurance Expense, Utilities Expense, and Supplies Expense. Other data: 1. Supplies on hand at June 30 total $720. 2. A utility bill for $280 has not been recorded and will not be paid until next month. 3. The insurance policy is for a year. 4. Services were performed for $4,390 of unearned service revenue by the end of the month. 5. Salaries of $1,390 are accrued at June 30. 6. The equipment has a 5-year life with no salvage value and is being depreciated at $250 per month for 60 months. 7. Invoices representing $4,030 of services performed during the month have not been recorded as of June 30.
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.
| KUMAR CONSULTING Trial Balance June 30, 2017 |
||||
|---|---|---|---|---|
| Debit | Credit | |||
|
Cash
|
$ 6,850 | |||
|
|
7,000 | |||
|
Supplies
|
2,007 | |||
|
Prepaid Insurance
|
2,160 | |||
|
Equipment
|
15,000 | |||
|
Accounts Payable
|
$ 4,245 | |||
|
Unearned Service Revenue
|
5,200 | |||
|
Common Stock
|
22,007 | |||
|
Service Revenue
|
8,300 | |||
|
Salaries and Wages Expense
|
4,000 | |||
|
Rent Expense
|
2,735
|
|
||
|
$39,752
|
$39,752
|
In addition to those accounts listed on the trial balance, the chart of accounts for Kumar also contains the following accounts:
Other data:
| 1. | Supplies on hand at June 30 total $720. | |
| 2. | A utility bill for $280 has not been recorded and will not be paid until next month. | |
| 3. | The insurance policy is for a year. | |
| 4. | Services were performed for $4,390 of unearned service revenue by the end of the month. | |
| 5. | Salaries of $1,390 are accrued at June 30. | |
| 6. | The equipment has a 5-year life with no salvage value and is being |
|
| 7. | Invoices representing $4,030 of services performed during the month have not been recorded as of June 30. |
(a)
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No.
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Account Titles and Explanation
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