Problem 1 - Adjusting Entries Required: The following data are taken from an unadjusted trial balance at December 31, 2020 for Boston Company. Boston Company Selected Accounts from Unadjusted Trial Balance as of December 31, 2020 Account Debit Credit Cash 25,000 Supplies 1,200 Prepaid Rent 1,800 Equipment 9,000 Accumulated Depreciation - Equipment 4,000 Accounts Payable 12,000 Salary Payable - Income Taxes Payable - Unearned Revenue 5,000 Adjustments needed for: a. Supplies on hand at the end of the month, $500 b. The prepaid rent is for the 3 months starting on December 1, 2020 c. Depreciation on the equipment for the end of year, $1,000 d. Salaries owed for the last three days of the year, $1,500 e. Half of the unearned revenue has been earned by the end of the year f. Estimated income taxes due for 2020, $9,000 General Journal Date Account Debit Credit a. b. c. d. e. f.
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.
| Problem 1 - |
| Required: | ||||||||
| The following data are taken from an unadjusted |
||||||||
| Boston Company | ||||||||
| Selected Accounts from Unadjusted Trial Balance as of December 31, 2020 | ||||||||
| Account | Debit | Credit | ||||||
| Cash | 25,000 | |||||||
| Supplies | 1,200 | |||||||
| Prepaid Rent | 1,800 | |||||||
| Equipment | 9,000 | |||||||
| 4,000 | ||||||||
| Accounts Payable | 12,000 | |||||||
| Salary Payable | - | |||||||
| Income Taxes Payable | - | |||||||
| Unearned Revenue | 5,000 | |||||||
| Adjustments needed for: | ||||||||
| a. Supplies on hand at the end of the month, $500 | ||||||||
| b. The prepaid rent is for the 3 months starting on December 1, 2020 | ||||||||
| c. Depreciation on the equipment for the end of year, $1,000 | ||||||||
| d. Salaries owed for the last three days of the year, $1,500 | ||||||||
| e. Half of the unearned revenue has been earned by the end of the year | ||||||||
| f. Estimated income taxes due for 2020, $9,000 |
| General Journal | |||||||||
| Date | Account | Debit | Credit | ||||||
| a. | |||||||||
| b. | |||||||||
| c. | |||||||||
| d. | |||||||||
| e. | |||||||||
| f. | |||||||||
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