Reena Photography has the following trial balance as of December 31, 2021 Reena Photography Trial Balance For the Year Ended December 31, 2021 Account Titles Cash Accounts Receivable Supplies Prepaid Insurance Equipment Notes payable Accounts payable Reena, Capital Reena, Drawing Fees Earned Wages expense Rent expense Advertising expense Utilities expense P P DR 1,865 7,250 1,232 330 30,000 4,500 56,730 11,585 525 3,150 117,167 P P CR 11,500 3,025 21,000 98,900 134,425 The debit and credit totals are not balance as a result of the following errors: a) The balance of cash was overstated by P2,500 b) A cash receipt of P3,100 was posted as a credit to Cash of P1,300 c) A debit of P1,250 to Accounts Receivable was not posted d) A return of P168 of defective supplies was erroneously posted as P186 credit to supplies e) An insurance policy acquired at a cost of P310 was posted as a credit to Prepaid Insurance f) The balance of Notes payable was overstated by P1,500 g) A credit of P75 in Accounts payable was overlooked when the balance when the balance of account was determined h) i) A debit of P3,000 for a withdrawal by the owner was posted as a credit to Reena, Capital The balance of P5,250 in Advertising expense was entered as P525 in the Trial Balance Miscellaneous expense, with a balance of P1,320, was omitted from the Trial Balance j)
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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