The Righter Shoe Store Company prepares monthly financial statements for its bank. The November 30 and December 31, 2016, trial balances contained the following account information: Nov. 30 Dec. 31 Dr. Cr. Dr. Cr. 1,500 Supplies Prepaid insurance Salaries and wages payable 3,000 6,000 4,500 15,000 1,000 10,000 Deferred rent revenue 2,000
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 also is known:
a. The December income statement reported $2,000 in supplies expense.
b. No insurance payments were made in December.
c. $10,000 was paid to employees during December for salaries and wages.
d. On November 1, 2016, a tenant paid Righter $3,000 in advance rent for the period November through January.
Deferred rent revenue was credited.
Required:
1. What was the cost of supplies purchased during December?
2. What was the
3. What was the adjusting entry recorded at the end of December for accrued salaries and wages?
4. What was the amount of rent revenue recognized in December? What adjusting entry was recorded at the end
of December for deferred rent?
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