PARRISH 4-6 ADJUSTING ENTRIES Please solve the problems listed below. State whether they are correct or not and if they aren't explain why as simply possible a) To record sales made on the last day of the year that the company has not yet billed Sales 800 AR 800 b) To record on month of rent expnese. Thre months ago, the company paid $8160 for one years rent in advance Rent Expense 680 Prepaid Rent 680 c) The company received an electric bill for $800 for the current month. The bill is due next month. Utilities Expense 800 Utilities Payable 800 d) The supplies account had a balance of $2300 at the end of last month. The count at the end of this month showe da balance of $400 Supplies 1900 Supplies Expense 900 e) The company performed $1000 of services that the client had paid for in advance Unearned Service Fees 1000 Service Fee Revenue 1000
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 4-6
Please solve the problems listed below. State whether they are correct or not and if they aren't explain why as simply possible
a) To record sales made on the last day of the year that the company has not yet billed
Sales 800
AR 800
b) To record on month of rent expnese. Thre months ago, the company paid $8160 for one years rent in advance
Rent Expense 680
Prepaid Rent 680
c) The company received an electric bill for $800 for the current month. The bill is due next month.
Utilities Expense 800
Utilities Payable 800
d) The supplies account had a balance of $2300 at the end of last month. The count at the end of this month showe da balance of $400
Supplies 1900
Supplies Expense 900
e) The company performed $1000 of services that the client had paid for in advance
Unearned Service Fees 1000
Service Fee Revenue 1000
State the transactions are correct or not as shown below:
a. Sale made on last day of year, not yet billed should be recorded by debiting accounts receivable and credit sales revenue for accrued revenue. The transaction of debit sales and credit accounts receivable is incorrect. Increase in accounts receivable should be debited, as it is a current asset. Sales are increased by crediting sales revenue account.
b. Adjusting entry for rent expense by debiting rent expense and crediting prepaid rent is correct. When one-year rent is paid in advance, prepaid rent account is debited, and cash account is credited. Adjusting entry for one month rent expense is debited with $680 ($8,160÷12). Prepaid rent account previously debited should be credited for decrease in prepaid rent. Rent expense should be debited for increase in rent expense of month.
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