PARRISH 4-5 ADJUSTING ENTRIES For each of the following adjusting entries, indentify whether the entry is correct. If it is not correct provide the correct entry and specify why the entry given is wrong. a) Depreciation Expense 1500 Accumulated Depreciation 1500 To record depreciation on trucks for the year. The trucks cost $30000 and have no salvage value. They are depreciated straight line over six years. (What does it mean if there is no salvage value and what is straight line depreciation) b) Interest Revenue 730 Interest Receivable 730 To record one year's interest on a lona to an officer of the company. The loan was for $10000 at 7% annual interest c) Supplies Expense 563 Supplies 563 The supplies account started with a balance of $1900. At the end of the period, a count of remaining supplies indicated we had $563 left. d) Wages Expense 1900 Wages Payable 1900 Employees earned $1900 since last payday e) Taxes Payable 700 Taxes Expense 700 The company received a bill from the County Treasurer for $700 for property taxes. The taxes are due next month
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.
PARRISH 4-5
For each of the following adjusting entries, indentify whether the entry is correct. If it is not correct provide the correct entry and specify why the entry given is wrong.
a) Depreciation Expense 1500
To record depreciation on trucks for the year. The trucks cost $30000 and have no salvage value. They are
b) Interest Revenue 730
Interest Receivable 730
To record one year's interest on a lona to an officer of the company. The loan was for $10000 at 7% annual interest
c) Supplies Expense 563
Supplies 563
The supplies account started with a balance of $1900. At the end of the period, a count of remaining supplies indicated we had $563 left.
d) Wages Expense 1900
Wages Payable 1900
Employees earned $1900 since last payday
e) Taxes Payable 700
Taxes Expense 700
The company received a bill from the County Treasurer for $700 for property taxes. The taxes are due next month
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