Prepare the correct adjusting entries using the following information. 1) The warehouse employees counted the ending inventory on hand at December 31, 2003. Their ending inventory balance is $40,000. (Remember we are using the periodic inventory method.) 2) The supplies department counted the supplies on hand. The balance of supplies at December 31 is $600. 3) The note payable is due in 5 years and was initiated on April 1, 2003. The note payable requires annual interest payments of 10% payable on March 31 of each year. (Note: I used 275 days out of 365 to prorate the interest expense on the note payable) 4) The company has estimated that bad debt expense is equal to one half of a percent (.005) of net sales (sales less sales discounts and returns) . 5) December salaries and wages will be paid on January 5, 2004. December salaries and wages are $5,000. 6) Two of the fixed assets have not been completely depreciated. These two items are a mainframe computer purchased for $20,000 in 2002 and a personal computer purchased in the current year on October 1, 2003, for $3,000. Computers are depreciated using the straight-line method over 3 years. The salvage value is 0. Note 1: the personal computer was purchased during the year and the depreciation will be prorated. Note 2: Assume prior years depreciation was recorded correctly, therefore you only need depreciation for 2003. 7) The company’s income tax rate is 15%. (For taxes most companies complete the other adjusting entries and then post them to the GL. Then prepare a preliminary income statement and calculate the taxes. Then they can make the adjusting entry for taxes and post to the general ledger). Attached is unadjust trial Check figures Post Trial Bal - 690088 Income before tax - 62249 Tot Assets 93229
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.
1) The warehouse employees counted the ending inventory on hand at December 31, 2003. Their ending inventory balance is $40,000. (Remember we are using the periodic inventory method.)
2) The supplies department counted the supplies on hand. The balance of supplies at December 31 is $600.
3) The note payable is due in 5 years and was initiated on April 1, 2003. The note payable requires annual interest payments of 10% payable on March 31 of each year. (Note: I used 275 days out of 365 to prorate the interest expense on the note payable)
4) The company has estimated that
5) December salaries and wages will be paid on January 5, 2004. December salaries and wages are $5,000.
6) Two of the fixed assets have not been completely
7) The company’s income tax rate is 15%. (For taxes most companies complete the other adjusting entries and then post them to the GL. Then prepare a preliminary income statement and calculate the taxes. Then they can make the adjusting entry for taxes and post to the general ledger).
Attached is unadjust trial
Check figures
Post Trial Bal - 690088
Income before tax - 62249
Tot Assets 93229
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