Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance. COOKIE CREATIONS Adjusted Trial Balance December 31, 2019 Debit Credit Cash $900 Accounts Receivable 665 Supplies 270 Prepaid Insurance 920 Equipment 900 Accumulated Depreciation—Equipment $30 Accounts Payable 55 Salaries and Wages Payable 43 Interest Payable 10 Unearned Service Revenue 230 Notes Payable 1,500 Owner’s Capital 610 Owner’s Drawings 380 Service Revenue 3,442 Salaries and Wages Expense 765 Utilities Expense 95 Advertising Expense 125 Supplies Expense 780 Depreciation Expense 30 Insurance Expense 80 Interest Expense 10 $5,920 $5,920 Using the information in the adjusted trial balance, do the following.
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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COOKIE CREATIONS
Adjusted Trial Balance December 31, 2019 |
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Debit
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Credit
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Cash
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$900 | |||
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665 |
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Supplies
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270 |
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Prepaid Insurance
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920 |
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Equipment
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900 |
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$30 | ||
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Accounts Payable
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55 | ||
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Salaries and Wages Payable
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43 | ||
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Interest Payable
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10 | |||
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Unearned Service Revenue
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230 | |||
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Notes Payable
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1,500 | |||
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Owner’s Capital
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610 | |||
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Owner’s Drawings
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380 | |||
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Service Revenue
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3,442 | |||
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Salaries and Wages Expense
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765 | |||
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Utilities Expense
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95 | |||
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Advertising Expense
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125 | |||
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Supplies Expense
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780 | |||
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Depreciation Expense
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30 | |||
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Insurance Expense
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80 | |||
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Interest Expense
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10 |
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$5,920
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$5,920
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Using the information in the adjusted trial balance, do the following.
(a1)
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COOKIE CREATIONS
Income Statement For the Two Months Ended December 31, 2019December 31, 2019For the Year Ended December 31, 2019 |
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DrawingsExpensesNet Income / (Loss)Owner’s Capital, November 1Owner’s Capital, December 31RevenuesTotal ExpensesTotal Revenues
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$
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DrawingsExpensesNet Income / (Loss)Owner’s Capital, November 1Owner’s Capital, December 31RevenuesTotal ExpensesTotal Revenues
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$
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DrawingsExpensesNet Income / (Loss)Owner’s Capital, November 1Owner’s Capital, December 31RevenuesTotal ExpensesTotal Revenues
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DrawingsExpensesNet Income / (Loss)Owner’s Capital, November 1Owner’s Capital, December 31RevenuesTotal ExpensesTotal Revenues
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$
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eTextbook and Media
List of Accounts
(a2)
(a3)
(b)
(c)
The income statement is one of the essential parts of the financial statement used for reporting the financial performance of the company over a specific accounting period, It includes revenues, expenditures, and also gain or loss.
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