The following six-column table for Solutions Co. includes the unadjusted trial balance as of December 31. Adjusted Trial Balance Unadjusted Trial Balance Adjustments Account Title Cash Dr. Cr. Dr. Cr. Dr. Cr. $ 10,000 Accounts receivable Supplies Machinery Accumulated depreciation-Machinery Interest payable Salaries payable Unearned rental fees Notes payable G. Clay, Capital G. Clay, Withdrawals Rental fees earned Depreciation expense- Machinery Salaries expense Interest expense Supplies expense 7,600 50,000 $ 20,000 7,200 30,000 14,200 9,500 32,450 24,500 2,250 Totals $103,850 $103,850
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.
Required
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, employees had earned $400 of unpaid and unrecorded wages. The next payday
is January 4, at which time $1,200 in wages will be paid.
b. The cost of supplies still available at December 31 is $3,450.
c. The notes payable require an interest payment to be made every three months. The amount of unrecorded
accrued interest at December 31 is $800. The next interest payment, at an amount of $900,
is due on January 15.
d. Analysis of the unearned rental fees shows that $3,200 remains unearned at December 31.
e. In addition to the machinery rental fees included in the revenue account balance, the company has
earned another $2,450 in unrecorded fees that will be collected on January 31. The company is also
expected to collect $5,400 on that same day for new fees earned in January.
f.
2. Prepare
3. Prepare journal entries to reverse the effects of the
4. Prepare journal entries to record the cash payments and cash collections described for January.
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