Pablo Bicarso Unadjusted Trial Balance 31-Dec-02 Account Title Debit $ Credit $ Cash 22,380 Client Fees Receviable 71,250 Supplies 6,000 Prepaid Studio Rent 2,500 Studio Equipment 96,000 Accumulated Dep. Studio Equipment 52,000 Accounts Payable 11,420 Interest Payable 480 Note Payable 24,000 Unearned Client Fees 8,000 Pablo Bicarso, Capital 70,000 Pablo Bicarso, withdrawals 5,000 Client Fees Earned 82,310 Supplies Expense 4,000 Salary Expense 17,250 Interest Expense 480 Studio Rent Expense 11,250 Utilities Expense 3,300 Depreciation Expense: Studio Equipment 8,800 Total 248,210 248,210 Other Data: i) Supplies on hand at December 31, 2002, total $1,000. ii) The studio pays rent quarterly (every three months) in advance. The last payment was made November 1, 2002. The next payment will be made in February 2003. iii) Studio equipment is being depreciated over 120 months (10 years). iv) On October 1, 2002, Pablo Bicarso borrowed $24,000 by signing a 12-month, 12% note payable. The entire amount, plus interest, is due on September 30, 2003. v) At December 31, 2002, $3,000 of previously unearned client fees had been earned. vi) Accrued, but unrecorded and uncollected client fees earned total $690 at December 31, 2002 vii) Accrued, but unrecorded and unpaid salary expense totals $750 at December 31, 2002. Required: a) Prepare the necessary adjusting journal entries on December 13, 2002. Prepare the accountant’s worksheet dated December 31, 2002 b) From the adjusted trial balance, prepare an income statement and statement of owner’s equity for the year ended December 31, 2002. Also prepare the entity’s classified balance sheet dated December 31, 2002. c) Prepare the necessary year-end closing entries.
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.
| Pablo Bicarso | ||
| Unadjusted |
||
| 31-Dec-02 | ||
| Account Title | Debit $ | Credit $ |
| Cash | 22,380 | |
| Client Fees Receviable | 71,250 | |
| Supplies | 6,000 | |
| Prepaid Studio Rent | 2,500 | |
| Studio Equipment | 96,000 | |
| Accumulated Dep. Studio Equipment | 52,000 | |
| Accounts Payable | 11,420 | |
| Interest Payable | 480 | |
| Note Payable | 24,000 | |
| Unearned Client Fees | 8,000 | |
| Pablo Bicarso, Capital | 70,000 | |
| Pablo Bicarso, withdrawals | 5,000 | |
| Client Fees Earned | 82,310 | |
| Supplies Expense | 4,000 | |
| Salary Expense | 17,250 | |
| Interest Expense | 480 | |
| Studio Rent Expense | 11,250 | |
| Utilities Expense | 3,300 | |
| Depreciation Expense: Studio Equipment | 8,800 | |
| Total | 248,210 | 248,210 |
Other Data:
i) Supplies on hand at December 31, 2002, total $1,000.
ii) The studio pays rent quarterly (every three months) in advance. The last payment was
made November 1, 2002. The next payment will be made in February 2003.
iii) Studio equipment is being
iv) On October 1, 2002, Pablo Bicarso borrowed $24,000 by signing a 12-month, 12%
note payable. The entire amount, plus interest, is due on September 30, 2003.
v) At December 31, 2002, $3,000 of previously unearned client fees had been earned.
vi) Accrued, but unrecorded and uncollected client fees earned total $690 at December
31, 2002
vii) Accrued, but unrecorded and unpaid salary expense totals $750 at December 31,
2002.
Required:
a) Prepare the necessary
the accountant’s worksheet dated December 31, 2002
b) From the adjusted trial balance, prepare an income statement and statement of
owner’s equity for the year ended December 31, 2002. Also prepare the entity’s
classified
c) Prepare the necessary year-end closing entries.
d) Prepare a post-closing trial balance.
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