[The following information applies to the questions displayed below.] Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Incorporated) on January 1, 2020. The annual reporting period ends December 31. The trial balance on January 1, 2021, follows (the amounts are rounded to thousands of dollars to simplify): Account Titles Debit Credit Cash $ 3 Accounts Receivable 5 Supplies 12 Land 0 Equipment 63 Accumulated Depreciation $ 6 Software 18 Accumulated Amortization 8 Accounts Payable 5 Notes Payable (short-term) 0 Salaries and Wages Payable 0 Interest Payable 0 Income Tax Payable 0 Common Stock 74 Retained Earnings 8 Service Revenue 0 Salaries and Wages Expense 0 Depreciation Expense 0 Amortization Expense 0 Income Tax Expense 0 Interest Expense 0 Supplies Expense 0 Totals $ 101 $ 101 Transactions and events during 2021 (summarized in thousands of dollars) follow: Borrowed $12 cash on March 1 using a short-term note. Purchased land on March 2 for future building site; paid cash, $9. Issued additional shares of common stock on April 3 for $26. Purchased software on July 4, $10 cash. Purchased supplies on account on October 5 for future use, $18. Paid accounts payable on November 6, $13. Signed a $25 service contract on November 7 to start February 1, 2022. Recorded revenues of $166 on December 8, including $43 on credit and $123 collected in cash. Recognized salaries and wages expense on December 9, $88 paid in cash. Collected accounts receivable on December 10, $27. Data for adjusting journal entries as of December 31: Unrecorded amortization for the year on software, $8. Supplies counted on December 31, 2021, $10. Depreciation for the year on the equipment, $6. Interest of $1 to accrue on notes payable. Salaries and wages earned but not yet paid or recorded, $12. Income tax for the year was $8. It will be paid in 2022. Required: Prepare the closing journal entry.
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 information applies to the questions displayed below.]
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Incorporated) on January 1, 2020. The annual reporting period ends December 31. The
| Account Titles | Debit | Credit |
|---|---|---|
| Cash | $ 3 | |
| 5 | ||
| Supplies | 12 | |
| Land | 0 | |
| Equipment | 63 | |
| $ 6 | ||
| Software | 18 | |
| Accumulated Amortization | 8 | |
| Accounts Payable | 5 | |
| Notes Payable (short-term) | 0 | |
| Salaries and Wages Payable | 0 | |
| Interest Payable | 0 | |
| Income Tax Payable | 0 | |
| Common Stock | 74 | |
| 8 | ||
| Service Revenue | 0 | |
| Salaries and Wages Expense | 0 | |
| Depreciation Expense | 0 | |
| Amortization Expense | 0 | |
| Income Tax Expense | 0 | |
| Interest Expense | 0 | |
| Supplies Expense | 0 | |
| Totals | $ 101 | $ 101 |
Transactions and events during 2021 (summarized in thousands of dollars) follow:
- Borrowed $12 cash on March 1 using a short-term note.
- Purchased land on March 2 for future building site; paid cash, $9.
- Issued additional shares of common stock on April 3 for $26.
- Purchased software on July 4, $10 cash.
- Purchased supplies on account on October 5 for future use, $18.
- Paid accounts payable on November 6, $13.
- Signed a $25 service contract on November 7 to start February 1, 2022.
- Recorded revenues of $166 on December 8, including $43 on credit and $123 collected in cash.
- Recognized salaries and wages expense on December 9, $88 paid in cash.
- Collected accounts receivable on December 10, $27.
Data for
- Unrecorded amortization for the year on software, $8.
- Supplies counted on December 31, 2021, $10.
- Depreciation for the year on the equipment, $6.
- Interest of $1 to accrue on notes payable.
- Salaries and wages earned but not yet paid or recorded, $12.
- Income tax for the year was $8. It will be paid in 2022.
Required:
- Prepare the closing
journal entry .
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