The Concord Theater is nearing the end of the year and is preparing for a meeting with its bankers to discuss the renewal of a loan. The accounts listed below appeared in the December 31, 2025, trial balance. Prepaid Advertising Equipment Accumulated Depreciation-Equipment Notes Payable Unearned Service Revenue Ticket Revenue Advertising Expense Salaries and Wages Expense Interest Expense Additional information is available as follows. 1. 2. 3. 4. 5. Debit $5,550 171,200 20,060 73,600 1,460 Credit $57,200 93,360 19,000 344,800 The equipment has an estimated useful life of 16 years and a salvage value of $33,600 at the end of that time. Concord uses the straight-line method for depreciation. The note payable is a one-year note given to the bank January 31 and bearing interest at 10%. Interest is calculated on a monthly basis. Late in December 2025, the theater sold 380 coupon ticket books at $50 each. 220 of these ticket books have been used by year-end. The cash received was recorded as Unearned Service Revenue. Advertising paid in advance was $5,550 and was debited to Prepaid Advertising. The company has used $2,480 of the advertising as of December 31, 2025. Salaries and wages accrued but unpaid at December 31, 2025, were $3,230.
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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