NESTOR MARTEL LAW OFFICE Trial Balance December 31, 2020 Cash 78,400 Accounts Receivable 8,900 6,000 Prepaid Insurance Office Supplies 2,500 Furniture and Equipment Accounts Payable Loans Payable 75,000 30,000 60,000 Nestor Martel, Capital Nestor Martel, Drawing 60,000 12,000 Legal Fees Earned 44,400 Salary Expense 5,500 Advertising Expense 3,600 Utilities Expense 1,500 Miscellaneous Expense 1,000 Total 194,400 194,400 The expanded chart of accounts listed below will be used as reference Balance Sheet Accounts 101 Cash 108 Furniture and Equipment 109 Accumulated Depreciation 201 Accounts Payable 204 Unearned Fees 102 Accounts Receivable 205 Loans Payable 301 Nestor Martel, Capital 104 Prepaid Advertising 105 Prepaid Insurance 202 Accrued Rent Expense 302 Nestor Martel, Drawing 106 Office Supplies 203 Accrued Interest Expense Income Statement Accounts 401 Fees Earned 504 Utilities Expense 507 Depreciation Expense 501 Salary Expense 505 Insurance Expense 509 Miscellaneous Expense 601 Interest Expense 502 Rent Expense 506 Supplies Expense 503 Advetising Expense
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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