The following is the adjusted trial balance for Nadia Company. Nadia Company Adjusted Trial Balance December 31, 2018 Account No. Debit Balances Credit Balances Cash 11 5,130 Accounts Receivable 12 3,300 Prepaid Rent 13 420 Equipment 18 12,400 Accumulated Depreciation 19 2,200 Accounts Payable 21 700 Notes Payable (final payment due 2020) 22 3,070 Nadia Porter, Capital 31 13,000 Nadia Porter, Drawing 32 700 Fees Earned 41 10,930 Wages Expense 51 2,450 Rent Expense 52 1,900 Utilities Expense 53 1,475 Depreciation Expense 54 1,150 Miscellaneous Expense 59 975 Totals 29,900 29,900 Prepare an income statement, statement of owner’s equity, and balance sheet. Assume that the capital balance represents a $10,000 beginning balance and that the owner made an additional investment of $3,000 during the period. The current portion of the note payable is $1,000. Journalize the two closing entries on 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.
- The following is the adjusted
trial balance for Nadia Company.
|
Nadia Company |
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|
Adjusted Trial Balance |
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|
December 31, 2018 |
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|
|
Account No. |
Debit Balances |
Credit Balances |
|
Cash |
11 |
5,130 |
|
|
|
12 |
3,300 |
|
|
Prepaid Rent |
13 |
420 |
|
|
Equipment |
18 |
12,400 |
|
|
|
19 |
|
2,200 |
|
Accounts Payable |
21 |
|
700 |
|
Notes Payable (final payment due 2020) |
22 |
|
3,070 |
|
Nadia Porter, Capital |
31 |
|
13,000 |
|
Nadia Porter, Drawing |
32 |
700 |
|
|
Fees Earned |
41 |
|
10,930 |
|
Wages Expense |
51 |
2,450 |
|
|
Rent Expense |
52 |
1,900 |
|
|
Utilities Expense |
53 |
1,475 |
|
|
Depreciation Expense |
54 |
1,150 |
|
|
Miscellaneous Expense |
59 |
975 |
|
|
Totals |
|
29,900 |
29,900 |
- Prepare an income statement, statement of owner’s equity, and
balance sheet . Assume that the capital balance represents a $10,000 beginning balance and that the owner made an additional investment of $3,000 during the period.
The current portion of the note payable is $1,000.
- Journalize the two closing entries on December 31.
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