Munroe Delivery Service has completed closing entries and the accounting cycle for 2024. The classified balance sheet on December 31, 2024 follows: 1 Prepare an adjusted trial balance as of January 31, 2025. 2 Prepare Munroe Delivery Service's income statement and statement of owner's equity for the month ended January 31, 2025, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last. 3 Calculate the following ratios as of January 31, 2025 for Munroe DeliveryService: return on assets, debt ratio, and current ratio. More info Jan. 3 Collected $700 cash from customer on account. Jan. 5 Purchased office supplies on account, $700. Jan. 12 Performed delivery services for a customer and received $3,500 cash. Jan. 15 Paid employee salary including the amount owed on December 31, $3,300. (The total cash paid of $3,300 includes the amount owed on December 31.) Jan. 18 Performed delivery services on account, $2,610. Jan. 20 Paid $650 on account. Jan. 24 Purchased fuel for the truck, paying $190 cash. Jan. 27 Completed the remaining work due for Unearned Revenue. Jan. 28 Paid office rent, $2,300, for the month of January. Jan. 30 Collected $2,500 in advance for delivery service to be performed later. Jan. 31 Munroe withdrew cash of $4,500.
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.
| 1 | Prepare an adjusted January 31, 2025.
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| 2 | Prepare Munroe Delivery Service's income statement and statement of owner's equity for the month ended January 31, 2025, and the classified balance sheet on that date. On the income statement, list expenses in decreasing order by amount—that is, the largest expense first, the smallest expense last. |
| 3 | Calculate the following ratios as of January 31,
2025 for Munroe DeliveryService: return on assets, debt ratio, and
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Jan. 3
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Collected $700 cash from customer on account.
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Jan. 5
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Purchased office supplies on account, $700.
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Jan. 12
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Performed delivery services for a customer and received $3,500 cash.
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Jan. 15
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Paid employee salary including the amount owed on December 31, $3,300. (The total cash paid of $3,300 includes the amount owed on December 31.)
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Jan. 18
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Performed delivery services on account, $2,610.
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Jan. 20
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Paid $650 on account.
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Jan. 24
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Purchased fuel for the truck, paying $190 cash.
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Jan. 27
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Completed the remaining work due for Unearned Revenue.
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Jan. 28
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Paid office rent, $2,300, for the month of January.
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Jan. 30
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Collected $2,500 in advance for delivery service to be performed later.
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Jan. 31
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Munroe withdrew cash of $4,500.
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1. Income Statement
2. Balance Sheet
The first statement shows the income earned and loss incurred by the organization in the financial year. It gives a summary of the revenue earned during the accounting period and Expenses incurred during the accounting year. It also shows the net profit or loss made by the organization.
The second Statement shows the balance of assets liabilities and Equity as of the balance sheet date. Assets include Current Assets which are short-term in nature. Long Term Assets are long-term in nature. Liabilities are the obligation of the organization which need to be paid by the company. Equity includes the amount invested in the business.
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