Presented below is the unadjusted trial balance of Rich Brook Travel Agency for the period ended February 28, 2018: ACCOUNT TITLES Cash Accounts Receivable Allowance for Uncollectible Accounts Prepaid Rent Furniture Accumulated Depreciation-F Office Equipment Accumulated Depreciation-OE Notes Payable Accounts Payable Salaries Payable Interest Payable Brook, Capital Brook, Withdrawals Travel Revenues Uncollectible Accounts Expense Rent Expense Depreciation Expense-F Depreciation Expense-OE Office Supplies Expense RICH BROOK TRAVEL AGENCY Unadjusted Trial Balance February 28, 2018 Salaries Expense Interest Expense Miscellaneous Expense TOTALS DEBIT P126,000 645,000 360,000 2,375,000 55,000 1,200,000 63,000 3.771,000 93,000 8,488,000 Information pertaining to Brook's Account is as follows: a) Unrecorded revenues earned but not yet collected amounted to P 23,500. b) Brook estimated that 5% of the outstanding accounts receivable is uncollectible. CREDIT 435,000 Required: 1. Prepare the adjusting entries and complete the 10-column worksheet. 2. Prepare the income statement, statement of changes in equity, and balance sheet. Bonus: Prepare the closing entries. 900,000 340,000 1,680,000 5,333,000 8,488,000 c) On November 1, 2017, Brook paid Sherlock Holmes Realtors P 360,000 for g months' rent on the office building commencing that date. d) Depreciation for the furniture is P135,000 and Depreciation for the Office Equipment is 8,500. e) As of February 28, 2018, unpaid salaries worth 98,000 is not yet recorded. f) The P 900,000 note payable was issued on October 1, 2017. It will be repaid in 12 months together with interest at an annual rate of 25%.
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.
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