The trial balance of ABC at December 31, 2023, and the data needed for the month-end adjustments follow. ABC Trial Balance December 31, 2023 Account Debit Credit Cash $ 12,100 Accounts receivable 14 300 Prepaid insurance 2 300 Supplies 1 100 Building 411 000 Accumulated depreciation $312,500 Accounts payable 1 950 Salary payable Unearned service revenue 2 400 Common stock 108 000 Retained earnings 6 740 Dividends 2 860 Service revenue 15 600 Salary expense 2 700 Insurance expense Depreciation expense Advertising expense 830 Supplies expense Total $447,190 $447,190 Adjustment data at December 31 follow: a. Prepaid insurance still in force, $700. b. Supplies used during the month, $500. c. Depreciation for the month, $1,600. d. Accrued salary expense, $400. e. Unearned service revenue still unearned, $1,400. Requirements 1. Journalize the adjusting entries. 2. The unadjusted balances have been entered for you in the general ledger accounts. Post the adjusting entries to the ledger accounts. 3. Prepare the adjusted trial balance. 4. Prepare the income statement, statement of retained earnings, and balance sheet for the business for the month ended December 31, 2023.
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 |
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| ABC | |||||
| Trial Balance | |||||
| December 31, 2023 | |||||
| Account | Debit | Credit | |||
| Cash | $ 12,100 | ||||
| 14 300 | |||||
| Prepaid insurance | 2 300 | ||||
| Supplies | 1 100 | ||||
| Building | 411 000 | ||||
| $312,500 | |||||
| Accounts payable | 1 950 | ||||
| Salary payable | |||||
| Unearned service revenue | 2 400 | ||||
| Common stock | 108 000 | ||||
| 6 740 | |||||
| Dividends | 2 860 | ||||
| Service revenue | 15 600 | ||||
| Salary expense | 2 700 | ||||
| Insurance expense | |||||
| Depreciation expense | |||||
| Advertising expense | 830 | ||||
| Supplies expense | |||||
| Total | $447,190 | $447,190 | |||
| Adjustment data at December 31 follow: | |||||
| a. Prepaid insurance still in force, $700. | |||||
| b. Supplies used during the month, $500. | |||||
| c. Depreciation for the month, $1,600. | |||||
| d. Accrued salary expense, $400. | |||||
| e. Unearned service revenue still unearned, $1,400. | |||||
| Requirements | |||||
| 1. Journalize the |
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| 2. The unadjusted balances have been entered for you in the general ledger accounts. |
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| 3. Prepare the adjusted trial balance. | |||||
| 4. Prepare the income statement, statement of retained earnings, and |
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