Office Specialists sells and services copiers and fax machines. The trial balance as of December 31, the end of its fiscal year, is as follows: ACCOUNT NAME Cash Merchandise Inventory Supplies Prepaid Insurance Store Equipment Accumulated Depreciation, Store Equipment Accounts Payable Employees' Income Tax Payable Payroll Taxes and Employees' Withholding Payable Unearned Service Contracts L. Grinwich, Capital L. Grinwich, Drawing Sales Service Contract Income Purchases Purchases Discounts Freight In Salary Expense Payroll Tax Expense Rent Expense Miscellaneous Expense TOTALS Office Specialists Trial Balance December 31, 2004 DEBIT 4,000.00 151,000.00 2,000.00 1,000.00 26,000.00 60,000.00 280,000.00 Complete the work sheet. CREDIT 12,500.00 50,000.00 3,000.00 1,500.00 15,000.00 44,100.00 453,000.00 56,000.00 3,800.00 3,900.00 80,000.00 8,000.00 20,000.00 3,000.00 638,900.00 638,900.00 The earnings from short-term contracts completed during the year have been recorded in Service Contract Income. Amounts received in advance for longer-term service contracts have been recorded in Unearned Service Contracts. To save space by reducing the number of accounts, we use the account called Payroll Taxes and Employees' Withholding Payable for the FICA and unemployment tax liabilities. Data for the adjustments are as follows: a-b. Merchandise inventory at December 31, Php139,500. c. Supplies inventory, Php1,700. d. Insurance expired, Php600. 5. Salaries accrued, Php2,000. 6. Depreciation of store equipment, Php5,200. 7. Unearned service contract income now earned, Php4,800. Instructions
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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