Reconstruct the unadjusted trial balance in a 14-column worksheet. Journalize the adjusting entries. Extend the adjusted trial balance in the worksheet for the income statement and balance sheet. Journalize the closing entries.
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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EXPRESS HANDLING AND DELIVERY |
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Adjusted |
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December 31, 2019 |
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Cash |
531,400 |
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650,800 |
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Supplies |
55,000 |
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Prepaid insurance |
56,000 |
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Land |
1,200,000 |
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Building |
2,116,000 |
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339,000 |
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Equipment |
700,000 |
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Accumulated depreciation – equipment |
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327,400 |
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Accounts payable |
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770,000 |
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Wages payable |
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25,400 |
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Interest payable |
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20,000 |
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Unearned service revenue |
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44,000 |
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Long-term debt |
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2,000,000 |
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M. Express, Capital |
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1,177,200 |
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M. Express, Withdrawal |
904,000 |
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Service revenue |
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2,587,800 |
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Wages expense |
480,400 |
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Utilities expense |
180,200 |
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Depreciation expense – building |
148,000 |
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Depreciation expense - equipment |
77,400 |
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Supplies expense |
69,600 |
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Insurance expense |
64,000 |
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Interest expense |
58,000 |
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|
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7,290,800 |
7,290,800 |
Adjusting data at December 31, 2019 which have all been effected in the foregoing are as follows:
- Accrued service revenue, Php 23,800.
- Supplies used during the year, Php 69,600.
- Prepaid insurance expired during the year, Php 64,000.
- Depreciation for the year: building, Php 148,000; equipment, Php 77,400.
- Accrued wages expense, Php 25,400.
- Accrued interest expense, Php 20,000.
- Unearned service revenue earned during the year, Php 154,000.
REQUIRED:
- Reconstruct the unadjusted trial balance in a 14-column worksheet.
- Journalize the
adjusting entries . - Extend the adjusted trial balance in the worksheet for the income statement and
balance sheet . - Journalize the closing entries.
- Extend the worksheet for the closing entries and the post-closing trial balance.
Prepare the income statement, statement of changes in
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