The trial balance of Morgan's Insurance Agency as of September 30, after the firm has completed its first month of operations, is as follows: Morgan's Insurance Company Trial Balance September 30, 20-- Account Name Debit Credit Cash 3,337 Accounts Receivable 1,428 Supplies 487 Prepaid Insurance 775 Office Equipment 5,146 Accounts Payable 1,367 S. Morgan, Capital 9,528 S. Morgan, Drawing 1,000 Commissions Earned 2,843 Rent Expense 885 Travel Expense 388 Utilities Expense 227 Miscellaneous Expense 65 13,738 13,738 Required: Record the amounts in the Trial Balance columns of the work sheet. Complete the work sheet by making the following adjustments: Expired or used-up insurance, $420. Depreciation expense on office equipment, $695. Supplies used, $150. If no amount is required, enter 0. Morgan's Insurance Agency Work Sheet For Month Ended September 30, 20-- TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE INCOME STATEMENT BALANCE SHEET ACCOUNT NAME DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT 1 Cash 1 2 Accounts Receivable 2 3 Supplies 3 4 Prepaid Insurance 4 5 Office Equipment 5 6 Accounts Payable 6 7 S. Morgan, Capital 7 8 S. Morgan, Drawing 8 9 Commissions Earned 9 10 Rent Expense 10 11 Travel Expense 11 12 Utilities Expense 12 13 Miscellaneous Expense 13 14 14 15 Insurance Expense 15 16 Depr. Exp., Office Equipment 16 17 Accum. Depr., Office Equipment 17 18 Supplies Expense 18 19 19 20 Net Income 20 21 21
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
| Morgan's Insurance Company | ||
| Trial Balance | ||
| September 30, 20-- | ||
| Account Name | Debit | Credit |
| Cash | 3,337 | |
| 1,428 | ||
| Supplies | 487 | |
| Prepaid Insurance | 775 | |
| Office Equipment | 5,146 | |
| Accounts Payable | 1,367 | |
| S. Morgan, Capital | 9,528 | |
| S. Morgan, Drawing | 1,000 | |
| Commissions Earned | 2,843 | |
| Rent Expense | 885 | |
| Travel Expense | 388 | |
| Utilities Expense | 227 | |
| Miscellaneous Expense | 65 | |
| 13,738 | 13,738 |
Required:
- Record the amounts in the Trial Balance columns of the work sheet.
- Complete the work sheet by making the following adjustments:
- Expired or used-up insurance, $420.
Depreciation expense on office equipment, $695.- Supplies used, $150.
If no amount is required, enter 0.
| Morgan's Insurance Agency | ||||||||||||
| Work Sheet | ||||||||||||
| For Month Ended September 30, 20-- | ||||||||||||
| TRIAL BALANCE | ADJUSTMENTS | ADJUSTED TRIAL BALANCE | INCOME STATEMENT | |||||||||
| ACCOUNT NAME | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | DEBIT | CREDIT | ||
| 1 | Cash | 1 | ||||||||||
| 2 | Accounts Receivable | 2 | ||||||||||
| 3 | Supplies | 3 | ||||||||||
| 4 | Prepaid Insurance | 4 | ||||||||||
| 5 | Office Equipment | 5 | ||||||||||
| 6 | Accounts Payable | 6 | ||||||||||
| 7 | S. Morgan, Capital | 7 | ||||||||||
| 8 | S. Morgan, Drawing | 8 | ||||||||||
| 9 | Commissions Earned | 9 | ||||||||||
| 10 | Rent Expense | 10 | ||||||||||
| 11 | Travel Expense | 11 | ||||||||||
| 12 | Utilities Expense | 12 | ||||||||||
| 13 | Miscellaneous Expense | 13 | ||||||||||
| 14 | 14 | |||||||||||
| 15 | Insurance Expense | 15 | ||||||||||
| 16 | Depr. Exp., Office Equipment | 16 | ||||||||||
| 17 | Accum. Depr., Office Equipment | 17 | ||||||||||
| 18 | Supplies Expense | 18 | ||||||||||
| 19 | 19 | |||||||||||
| 20 | Net Income | 20 | ||||||||||
| 21 | 21 |
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