The accountant for Franklin Company prepared the following list of account balances from the company’s records for the year ended December 31, 2021: Fees Earned ₱165,000 Cash ₱30,000 Accounts Receivable ₱14,000 Selling Expenses ₱44,000 Equipment ₱64,000 Franklin, Capital ₱27,000 Accounts Payable ₱12,000 Interest Income ₱3,000 Salaries & Wages Expense ₱40,000 Prepaid Rent ₱2,000 Income Taxes Payable ₱5,000 Income Taxes Expense ₱18,000 Notes Payable ₱20,000 Rent Expense ₱20,000 Determine the total assets at the end of 2021 for Franklin Company.
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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For Questions 3 – 5. The accountant for Franklin Company prepared the following list of account balances from the company’s records for the year ended December 31, 2021:
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Determine the total assets at the end of 2021 for Franklin Company.
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Determine the total liabilities at the end of 2021 for Franklin Company. |
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Based on this information, is Franklin Company profitable? Explain your answer. |
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