The following adjusted trial balance was taken from the work sheet of Babylon Lighting. Assume the owner, Jillian Johnson, made no additional investments during the year. Babylon Lighting Adjusted Trial Balance December 31, 20-- Account Title Debit Credit Cash 29,900 Accounts Receivable 55,200 Merchandise Inventory 42,600 Store Supplies 1,180 Office Supplies 400 Prepaid Insurance 1,200 Store Equipment 37,000 Accumulated Depreciation—Store Equipment 5,000 Office Equipment 15,000 Accumulated Depreciation—Office Equipment 3,600 Accounts Payable 27,300 Salaries Payable 1,340 Mortgage Payable (Current portion: $1,200) 29,600 Jillian Johnson, Capital 104,480 Jillian Johnson, Drawing 8,600 Income Summary 46,600 42,600 Sales 106,600 Sales Discounts 1,600 Purchases 61,800 Purchases Returns and Allowances 3,000 Purchases Discounts 2,400 Sales Salary Expense 13,600 Office Salary Expense 7,600 Advertising Expense 800 Store Supplies Expense 600 Office Supplies Expense 480 Insurance Expense 260 Depreciation Expense—Store Equipment 1,000 Depreciation Expense—Office Equipment 500 325,920 325,920 Required: Prepare a classified balance sheet for Babylon Lighting as of December 31, 20--.
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.
The following adjusted
| Babylon Lighting Adjusted Trial Balance December 31, 20-- |
||||
| Account Title | Debit | Credit | ||
| Cash | 29,900 | |||
| 55,200 | ||||
| Merchandise Inventory | 42,600 | |||
| Store Supplies | 1,180 | |||
| Office Supplies | 400 | |||
| Prepaid Insurance | 1,200 | |||
| Store Equipment | 37,000 | |||
| 5,000 | ||||
| Office Equipment | 15,000 | |||
| Accumulated Depreciation—Office Equipment | 3,600 | |||
| Accounts Payable | 27,300 | |||
| Salaries Payable | 1,340 | |||
| Mortgage Payable (Current portion: $1,200) | 29,600 | |||
| Jillian Johnson, Capital | 104,480 | |||
| Jillian Johnson, Drawing | 8,600 | |||
| Income Summary | 46,600 | 42,600 | ||
| Sales | 106,600 | |||
| Sales Discounts | 1,600 | |||
| Purchases | 61,800 | |||
| Purchases Returns and Allowances | 3,000 | |||
| Purchases Discounts | 2,400 | |||
| Sales Salary Expense | 13,600 | |||
| Office Salary Expense | 7,600 | |||
| Advertising Expense | 800 | |||
| Store Supplies Expense | 600 | |||
| Office Supplies Expense | 480 | |||
| Insurance Expense | 260 | |||
| Depreciation Expense—Store Equipment | 1,000 | |||
| Depreciation Expense—Office Equipment | 500 | |||
| 325,920 | 325,920 |
Required:
Prepare a classified
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