The Lexington Group Unadjusted Trial Balance May 31, 20Y6 Debit Balances Credit Balances Cash 20,350 Accounts Receivable 37,000 Supplies 1,100 Prepaid Insurance 200 Equipment 171,175 Notes Payable 36,000 Accounts Payable 26,000 Common Stock 50,000 Retained Earnings 94,150 Dividends 15,000 Fees Earned 429,850 Wages Expense 270,000 Rent Expense 63,000 Advertising Expense 25,200 Miscellaneous Expense 5,100 608,125 636,000 The debit and credit totals are not equal as a result of the following errors: The cash entered on the trial balance was overstated by $7,000. A cash receipt of $8,200 was posted as a debit to Cash of $2,800. A debit of $16,500 to Accounts Receivable was not posted. A return of $125 of defective supplies was erroneously posted as a $1,250 credit to Supplies. An insurance policy acquired at a cost of $3,600 was posted as a credit to Prepaid Insurance. The balance of Notes Payable was understated by $9,000. A credit of $10,000 in Accounts Payable was overlooked when determining the balance of the account. A debit of $5,000 for dividends was posted as a credit to Retained Earnings. The balance of $60,300 in Rent Expense was entered as $63,000 in the trial balance. Gas, Electricity, and Water Expense, with a balance of $16,350, was omitted from the trial balance. Required: Question Content Area 1. Prepare a corrected unadjusted trial balance as of May 31, 20Y6. List all accounts in the order of Assets, Liabilities, Stockholders’ equity, Revenues, and Expenses. If an amount box does not require an entry, leave it blank.
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 Lexington Group has the following unadjusted
| The Lexington Group Unadjusted Trial Balance May 31, 20Y6 |
||||
| Debit Balances | Credit Balances | |||
| Cash | 20,350 | |||
| 37,000 | ||||
| Supplies | 1,100 | |||
| Prepaid Insurance | 200 | |||
| Equipment | 171,175 | |||
| Notes Payable | 36,000 | |||
| Accounts Payable | 26,000 | |||
| Common Stock | 50,000 | |||
| 94,150 | ||||
| Dividends | 15,000 | |||
| Fees Earned | 429,850 | |||
| Wages Expense | 270,000 | |||
| Rent Expense | 63,000 | |||
| Advertising Expense | 25,200 | |||
| Miscellaneous Expense | 5,100 | |||
| 608,125 | 636,000 |
The debit and credit totals are not equal as a result of the following errors:
- The cash entered on the trial balance was overstated by $7,000.
- A cash receipt of $8,200 was posted as a debit to Cash of $2,800.
- A debit of $16,500 to Accounts Receivable was not posted.
- A return of $125 of defective supplies was erroneously posted as a $1,250 credit to Supplies.
- An insurance policy acquired at a cost of $3,600 was posted as a credit to Prepaid Insurance.
- The balance of Notes Payable was understated by $9,000.
- A credit of $10,000 in Accounts Payable was overlooked when determining the balance of the account.
- A debit of $5,000 for dividends was posted as a credit to Retained Earnings.
- The balance of $60,300 in Rent Expense was entered as $63,000 in the trial balance.
- Gas, Electricity, and Water Expense, with a balance of $16,350, was omitted from the trial balance.
Required:
Question Content Area
1. Prepare a corrected unadjusted trial balance as of May 31, 20Y6. List all accounts in the order of Assets, Liabilities,
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