Terrific Temps fills temporary employment positions for local businesses. Some businesses pay in advance for services;
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.
Terrific Temps fills temporary employment positions for local businesses. Some businesses pay in
advance for services; others are billed after services have been performed. Advanced payments are
credited to an account entitled Unearned Fees.
An unadjusted
have already been made for the first 11 months of 2011, but not for December.)
![Other Data
1. Accrued but unrecorded fees eamed as of December 31, 2011, amount to $1,500.
2. Records show that $2,500 of cash receipts originally recorded as unearned fees had been
carned as of December 31.
3. The company purchased a six-month insurance policy on September 1, 2011, for $1,800.
4. On December 1, 2011, the company paid its rent through February 28, 2012.
5. Office supplies on hand at December 31 amount to $400.
6. All equipment was purchased when the business first formed. The estimated life of the equip-
ment at that time was 10 years (or 120 months).
7. On August 1, 2011, the company borrowed $12,000 by signing a six-month, 8 percent note
payable. The entire note, plus six months' accrued interest, is due on February 1, 2012.
8. Accrued but unrecorded salaries at December 31 amount to $2,700.
9. Estimated income taxes expense for the entire year totals $15,000. Taxes are due in the first
quarter of 2012.
Instructions
a. For cach of the numbered paragraphs, prepare the necessary adjusting entry (including an
explanation).
b. Determine that amount at which each of the following accounts will be reported in the
company's 2011 income statement:
1. Fees Earned
2. Travel Expense
3. Insurance Expense
4. Rent Expense
5. Office Supplies Expense
6. Utilities Expense
7. Depreciation Expense: Equipment
8. Interest Expense
9. Salaries Expense
10. Income Taxes Expense
The unadjusted trial balance reports dividends of $3,000. As of December 31, 2011, have
these dividends been paid? Explain.
C.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbaf50a29-7584-4289-aeff-b937edfbd5b5%2F4651e173-5310-4d12-ab16-d4ecfe6d0cc2%2Ftnaxw6u_processed.png&w=3840&q=75)
![TERRIFIC TEMPS
UNADJUSTED TRIAL BALANCE
DECEMBER 31, 2011
Cash..
$ 27,020
Accounts receivable.
59,200
Unexpired insurance.
900
Prepaid rent
3,000
Office supplies
Equipment
600
60,000
$ 29,500
Accumulated depreciation: equipment .
Accounts payable..
Notes payable..
Interest payable
4,180
12,000
320
Unearned fees
6,000
Income taxes payable.
4,000
Unearned revenue
20,000
Retained earnings. .
Capital stock..
49,000
25,000
Dividends
3,000
Fees earned
75,000
Travel expense.
5,000
Insurance expense
2,980
Rent expense .
Office supplies expense.
Utilities expense ..
Depreciation expense: equipment
Salaries expense
9,900
...
780
4,800
.....
5,500
30,000
Interest expense
320
Income taxes expense
12,000
$225,000
$225,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbaf50a29-7584-4289-aeff-b937edfbd5b5%2F4651e173-5310-4d12-ab16-d4ecfe6d0cc2%2F0dpzb1w_processed.png&w=3840&q=75)
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