The unadjusted trial balance of Lukas Films Corporation includes the following account balances at December 31, 2020, its fiscal year-end. Assume all accounts have normal debit or credit balances as applicable. Prepaid rent Rwf 1,500 Equipment 2,400 Unearned advertising revenue 1,000 Insurance expense 900 Supplies expense Rwf 600 Telephone expense 825 Wages expense 15,000 The following information applies at December 31: A physical count of supplies indicates that Rwf300 of supplies have not yet been used at December 31. A Rwf75 telephone bill for December has been received but not recorded. One day of wages amounting to Rwf125 remains unpaid and unrecorded at December 31; the amount will be included with the first Friday payment in January. The equipment was purchased December 1; it is expected to last 2 years. No depreciation has yet been recorded. The prepaid rent is for December 2020, and January and February 2021; rent is Rwf500 per month. Half of the advertising revenue has been earned at December 31. The Rwf900 amount in Insurance Expense is for a one-year policy, effective July 1, 2020.
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 unadjusted
|
Prepaid rent Rwf 1,500 Equipment 2,400 Unearned advertising revenue 1,000 Insurance expense 900 |
Supplies expense Rwf 600 Telephone expense 825 Wages expense 15,000 |
The following information applies at December 31:
- A physical count of supplies indicates that Rwf300 of supplies have not yet been used at December 31.
- A Rwf75 telephone bill for December has been received but not recorded.
- One day of wages amounting to Rwf125 remains unpaid and unrecorded at December 31; the amount will be included with the first Friday payment in January.
- The equipment was purchased December 1; it is expected to last 2 years. No
depreciation has yet been recorded. - The prepaid rent is for December 2020, and January and February 2021; rent is Rwf500 per month.
- Half of the advertising revenue has been earned at December 31.
- The Rwf900 amount in Insurance Expense is for a one-year policy, effective July 1, 2020.
Required: Prepare all necessary
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