The adjusted trial balance for Chiara Company as of December 31 follows. Cash Accounts receivable Interest receivable Debit $ 106,500 Credit 52,500 21,800 Notes receivable (due in 90 days) Office supplies Automobiles Accumulated depreciation-Automobiles Equipment Accumulated depreciation-Equipment Land Accounts payable 171,000 16,500 173,000 $ 85,000 138,000 18,000 79,000 92,000 Interest payable 30,000 Salaries payable 21,000 Unearned revenue 30,000 Long-term notes payable 146,000 Common stock 27,580 Retained earnings 248,220 Dividends 48,000 Services revenue 514,000 Interest revenue 32,000 Depreciation expense-Automobiles 27,500 Depreciation expense-Equipment 20,000 Salaries expense 185,000 Wages expense 42,000 Interest expense 37,200 Office supplies expense 35,000 Advertising expense 63,000 Repairs expense-Automobiles 27,800 Totals $ 1,243,800 $ 1,243,800 Required: Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31; (b) the statement of retained earnings for the year ended December 31 [Note: Retained Earnings at December 31 of the prior year was $248,220.]; and (c) the balance sheet as of December 31.
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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![The adjusted trial balance for Chiara Company as of December 31 follows.
Cash
Accounts receivable
Interest receivable
Debit
$ 106,500
Credit
52,500
21,800
Notes receivable (due in 90 days)
Office supplies
Automobiles
Accumulated depreciation-Automobiles
Equipment
Accumulated depreciation-Equipment
Land
Accounts payable
171,000
16,500
173,000
$ 85,000
138,000
18,000
79,000
92,000
Interest payable
30,000
Salaries payable
21,000
Unearned revenue
30,000
Long-term notes payable
146,000
Common stock
27,580
Retained earnings
248,220
Dividends
48,000
Services revenue
514,000
Interest revenue
32,000
Depreciation expense-Automobiles
27,500
Depreciation expense-Equipment
20,000
Salaries expense
185,000
Wages expense
42,000
Interest expense
Advertising expense
37,200
Office supplies expense
35,000
63,000
Repairs expense-Automobiles
27,800
Totals
$ 1,243,800
$ 1,243,800
Required:
Use the information in the adjusted trial balance to prepare (a) the income statement for the year ended December 31; (b) the
statement of retained earnings for the year ended December 31 [Note: Retained Earnings at December 31 of the prior year was
$248,220.]; and (c) the balance sheet as of December 31.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdf292cbd-60b1-434b-bfcb-0f18ee9ae359%2F6cd7961e-8f5e-49f7-be5b-eedc25359971%2Fhlpptfm_processed.png&w=3840&q=75)
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