Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services’ accounting clerk prepared the following unadjusted trial balance at July 31, 20Y6: Reece Financial Services Co. Unadjusted Trial Balance July 31, 20Y6 Debit Balances Credit Balances Cash 10,200 Accounts Receivable 34,750 Prepaid Insurance 6,000 Supplies 1,725 Land 50,000 Building 155,750 Accumulated Depreciation—Building 62,850 Equipment 45,000 Accumulated Depreciation—Equipment 17,650 Accounts Payable 3,750 Unearned Rent 3,600 Joni Reece, Capital 153,550 Joni Reece, Drawing 8,000 Fees Earned 158,600 Salaries and Wages Expense 56,850 Utilities Expense 14,100 Advertising Expense 7,500 Repairs Expense 6,100 Miscellaneous Expense 4,025 400,000 400,000 The data needed to determine year-end adjustments are as follows: Depreciation of building for the year, $6,400. Depreciation of equipment for the year, $2,800. Accrued salaries and wages at July 31, $900. Unexpired insurance at July 31, $1,500. Fees earned but unbilled on July 31, $10,200. Supplies on hand at July 31, $615. Rent unearned at July 31, $300.
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.
Reece Financial Services Co., which specializes in appliance repair services, is owned and operated by Joni Reece. Reece Financial Services’ accounting clerk prepared the following unadjusted
| Reece Financial Services Co. | ||||
| Unadjusted Trial Balance | ||||
| July 31, 20Y6 | ||||
| Debit Balances |
Credit Balances |
|||
| Cash | 10,200 | |||
| 34,750 | ||||
| Prepaid Insurance | 6,000 | |||
| Supplies | 1,725 | |||
| Land | 50,000 | |||
| Building | 155,750 | |||
| 62,850 | ||||
| Equipment | 45,000 | |||
| Accumulated Depreciation—Equipment | 17,650 | |||
| Accounts Payable | 3,750 | |||
| Unearned Rent | 3,600 | |||
| Joni Reece, Capital | 153,550 | |||
| Joni Reece, Drawing | 8,000 | |||
| Fees Earned | 158,600 | |||
| Salaries and Wages Expense | 56,850 | |||
| Utilities Expense | 14,100 | |||
| Advertising Expense | 7,500 | |||
| Repairs Expense | 6,100 | |||
| Miscellaneous Expense | 4,025 | |||
| 400,000 | 400,000 |
The data needed to determine year-end adjustments are as follows:
- Depreciation of building for the year, $6,400.
- Depreciation of equipment for the year, $2,800.
- Accrued salaries and wages at July 31, $900.
- Unexpired insurance at July 31, $1,500.
- Fees earned but unbilled on July 31, $10,200.
- Supplies on hand at July 31, $615.
- Rent unearned at July 31, $300.
Required:
Question Content Area
1. Journalize the
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2. Determine the balances of the accounts affected by the adjusting entries and prepare an adjusted trial balance. If an amount box does not require an entry, leave it blank.
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