Next Job, Inc., provides employment consulting services. The company adjusts its accounts monthly but performs closing entries annually on December 31. The firm’s unadjusted trial balance dated December 31, 2011, is shown on the following page. Other Data Accrued but unrecorded and uncollected consulting fees earned total 25,000 at December 31, 2011. The company determined that 15,000 of previously unearned consulting services fees had been earned at December 31, 2011. Office supplies on hand at December 31 total 300. The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years (72 months). The company prepaid its nine-month rent agreement on June 1, 2011. The company prepaid its six-month insurance policy on December 1, 2011. Accrued but unpaid salaries total 12,000 at December 31, 2011. On September 1, 2011, the company borrowed 60,000 by signing an eight-month, 4 percent note payable. The entire amount, plus interest, is due on March 1, 2012. The company’s accounting firm estimates that income taxes expense for the entire year is 50,000. The unpaid portion of this amount is due early in 2012. Instructions: Prepare the necessary adjusting journal entries on December 31, 2011. Also prepare an adjusted trial balance dated December 31, 2011.
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.
Next Job, Inc., provides employment consulting services. The company adjusts its accounts monthly but performs closing entries annually on December 31. The firm’s unadjusted
Other Data
- Accrued but unrecorded and uncollected consulting fees earned total 25,000 at December 31, 2011.
- The company determined that 15,000 of previously unearned consulting services fees had been earned at December 31, 2011.
- Office supplies on hand at December 31 total 300.
- The company purchased all of its equipment when it first began business. At that time, the estimated useful life of the equipment was six years (72 months).
- The company prepaid its nine-month rent agreement on June 1, 2011.
- The company prepaid its six-month insurance policy on December 1, 2011.
- Accrued but unpaid salaries total 12,000 at December 31, 2011.
- On September 1, 2011, the company borrowed 60,000 by signing an eight-month, 4 percent note payable. The entire amount, plus interest, is due on March 1, 2012.
- The company’s accounting firm estimates that income taxes expense for the entire year is 50,000. The unpaid portion of this amount is due early in 2012.
Instructions:
Prepare the necessary
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 4 images
