On January 1, 2019, Dance Training Co entered its second year of operations. Dance Training Co provides elite personal training courses to dancers who want to work on cruise ships. On December 31, 2020, Jordan Ryan, the owner, finalized the company’s records, which showed the following items. Accounts payable $ 10,200 Accounts receivable 50,000 Cash 26,400 Choreography revenue 24,100 Dance studio equipment 20,000 Dance training revenue 143,000 Furniture 14,000 Interest expense 2,900 Jordan Ryan, capital, December 31, 2019* 80,100 Jordan Ryan, withdrawals 50,000 Notes payable 28,000 Prepaid rent 4,800 Rent expense 18,000 Supplies 3,200 Supplies expense 16,700 Utilities expense 10,600 Wages expense 68,800 *Hint: The ending capital balance for one period is the beginning capital balance for the next period. There were no owner investments during the year ended December 31, 2020. Required: a. Prepare an income statement for the year ended December 31, 2020.
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.
On January 1, 2019, Dance Training Co entered its second year of operations. Dance Training Co provides elite personal training courses to dancers who want to work on cruise ships. On December 31, 2020, Jordan Ryan, the owner, finalized the company’s records, which showed the following items.
| Accounts payable | $ | 10,200 | |
| Accounts receivable | 50,000 | ||
| Cash | 26,400 | ||
| Choreography revenue | 24,100 | ||
| Dance studio equipment | 20,000 | ||
| Dance training revenue | 143,000 | ||
| Furniture | 14,000 | ||
| Interest expense | 2,900 | ||
| Jordan Ryan, capital, December 31, 2019* | 80,100 | ||
| Jordan Ryan, withdrawals | 50,000 | ||
| Notes payable | 28,000 | ||
| Prepaid rent | 4,800 | ||
| Rent expense | 18,000 | ||
| Supplies | 3,200 | ||
| Supplies expense | 16,700 | ||
| Utilities expense | 10,600 | ||
| Wages expense | 68,800 | ||
*Hint: The ending capital balance for one period is the beginning capital balance for the next period. There were no owner investments during the year ended December 31, 2020.
Required:
a. Prepare an income statement for the year ended December 31, 2020.
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