Preparation of Closing Entries and a Statement of Earnings Clayoquot Boat Repair Ltd. has entered and posted its adjusting entries for 2022. The following are selected account balances after adjustment: Sales Revenue $ 692,400 Interest Revenue 7,900 Accounts Payable 8,330 Wages Expense 405,100 Accounts Receivable, 12/31/2022 65,000 Supplies Expense 68,350 Supplies, 12/31/2022 179,000 Prepaid Rent 7,200 Rent Expense 28,300 Unearned Sales Revenue 12,200 Insurance Expense 93,800 Wages Payable 11,700 Utilities Expense 12,300 Interest Expense 9,500 Depreciation Expense, Equipment 20,000 Accumulated Depreciation, Equipment 75,000 Income Tax Expense 12,300 Income Tax Payable 8,300 Dividends Declared 7,800 Required: 1. Using the accounts and balances above, prepare the closing entries for 2022. For those boxes in which no entry is required, leave the box blank. 2. Prepare a statement of earnings for Port Austin Boat Repair.
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.
Preparation of Closing Entries and a Statement of Earnings
Clayoquot Boat Repair Ltd. has entered and
| Sales Revenue | $ 692,400 |
| Interest Revenue | 7,900 |
| Accounts Payable | 8,330 |
| Wages Expense | 405,100 |
| 65,000 | |
| Supplies Expense | 68,350 |
| Supplies, 12/31/2022 | 179,000 |
| Prepaid Rent | 7,200 |
| Rent Expense | 28,300 |
| Unearned Sales Revenue | 12,200 |
| Insurance Expense | 93,800 |
| Wages Payable | 11,700 |
| Utilities Expense | 12,300 |
| Interest Expense | 9,500 |
| 20,000 | |
| 75,000 | |
| Income Tax Expense | 12,300 |
| Income Tax Payable | 8,300 |
| Dividends Declared | 7,800 |
Required:
1. Using the accounts and balances above, prepare the closing entries for 2022. For those boxes in which no entry is required, leave the box blank.
2. Prepare a statement of earnings for Port Austin Boat Repair.
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