The following selected accounts and their current balances appear in the ledger of Druid Hills Co. for the fiscal year ended May 31, 20Y8: Cash $ 290,800 Kristina Marble, Drawing $ 121,200 Accounts Receivable 1,170,600 Sales 13,746,000 Merchandise Inventory 2,075,300 Cost of Merchandise Sold 9,513,000 Office Supplies 16,400 Sales Salaries Expense 1,110,100 Prepaid Insurance 9,700 Advertising Expense 666,500 Office Equipment 1,005,800 Depreciation Expense— Accumulated Depreciation— Store Equipment 169,700 Office Equipment 666,500 Miscellaneous Selling Expense 46,100 Store Equipment 4,362,700 Office Salaries Expense 787,700 Accumulated Depreciation— Rent Expense 113,900 Store Equipment 2,205,600 Depreciation Expense— Accounts Payable 395,100 Office Equipment 60,600 Customer Refunds Payable 48,500 Insurance Expense 58,200 Salaries Payable 50,300 Office Supplies Expense 34,100 Note Payable Miscellaneous Administrative Exp. 17,600 (final payment due in 10 years) 363,600 Interest Expense 25,400 Kristina Marble, Capital 4,179,800 Instructions: 1. Prepare a multiple-step income statement. 2. Prepare a statement of owner’s equity. 3. Prepare a balance sheet, assuming that the current portion of the note payable is $60,600. 4. Briefly explain how multiple-step and single-step income statements differ.
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 selected accounts and their current balances appear in the ledger of Druid Hills Co. for the fiscal year ended May 31, 20Y8:
| Cash | $ 290,800 | Kristina Marble, Drawing | $ 121,200 |
| 1,170,600 | Sales | 13,746,000 | |
| Merchandise Inventory | 2,075,300 | Cost of Merchandise Sold | 9,513,000 |
| Office Supplies | 16,400 | Sales Salaries Expense | 1,110,100 |
| Prepaid Insurance | 9,700 | Advertising Expense | 666,500 |
| Office Equipment | 1,005,800 | ||
| Store Equipment | 169,700 | ||
| Office Equipment | 666,500 | Miscellaneous Selling Expense | 46,100 |
| Store Equipment | 4,362,700 | Office Salaries Expense | 787,700 |
| Accumulated Depreciation— | Rent Expense | 113,900 | |
| Store Equipment | 2,205,600 | Depreciation Expense— | |
| Accounts Payable | 395,100 | Office Equipment | 60,600 |
| Customer Refunds Payable | 48,500 | Insurance Expense | 58,200 |
| Salaries Payable | 50,300 | Office Supplies Expense | 34,100 |
| Note Payable | Miscellaneous Administrative Exp. | 17,600 | |
| (final payment due in 10 years) | 363,600 | Interest Expense | 25,400 |
| Kristina Marble, Capital | 4,179,800 |
Instructions:
1. Prepare a multiple-step income statement.
2. Prepare a statement of owner’s equity.
3. Prepare a balance sheet, assuming that the current portion of the note payable is $60,600.
4. Briefly explain how multiple-step and single-step income statements differ.
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