Pavlov's Home Renovations was started in 2008 by Jim Pavlov. Jim operates the business from Required: an office in his home. Listed below, in alphabetical order, are the company's assets and liabilities 1 Prepare a classified trial balance, as at December 31, 2021, and the revenues, expenses, and drawings for the year ended December 31, 2021: 2 Record adjusting entries as at December 31, 2021. 3 Prepare an adjusted trial balance. Accounts payable $ 7,850 Operating expenses $ 3,545 4 Prepare income statement, statement of owner's equity, and balance sheet. Accounts receivable 10,080 Prepaid insurance 1,685 Cash 8,250 Salaries expense 88,230 Equipment 29,400 Service revenue 153,750 Insurance expense 3,375 Supplies 595 Interest expense 1,195 Supplies expense 20,095 J. Pavlov, drawings 44,800 Unearned revenue 15,000 Notes payable 30,800 Vehicles 42,000 Jim's capital at the beginning of 2021 was $45,850. He made no investments during the year. Additional Information: 1. The insurance policy for one year was purchased on August 1, 2021. 2. Operating expenses owing as at December 31, 2021 were $2,500. 3. Notes payable has interest of 4% per annum, the company pays interest on the first day of each month. 4. The vehicles have an estimated useful life of 15 years. 5. As of December 31, 2021, the company earned $8500 from the unearned revenue amount.
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.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps with 16 images
