The unadjusted trial balance of Mighty Fine Services Inc. includes the following account balances at December 31, 2020, its fiscal year-end. No adjustments have been recorded. Assume all accounts have normal debit or credit balances. Prepaid insurance Rwf 600 Unused supplies 500 Bank loan 5,000 Subscription revenue 9,000 Salaries payable Rwf 500 Rent expense 3,900 Truck operating expense 4,000 The following information applies to the fiscal year-end: The Rwf600 prepaid insurance is for a one-year policy, effective September 1, 2020. A physical count indicates that Rwf300 of supplies is still on hand at December 31. Interest on the bank loan is paid on the fifteenth day of each month; the unrecorded interest for the last 15 days of December amounts to Rwf25. The Subscription Revenue account consists of a cash receipts for 6- month subscriptions to the corporation’s Computer Trends report; the subscription period began December 1. Three days of salary amounting to Rwf300 remain unpaid at December 31, in addition to the previous week’s salaries of Rwf500, which have not yet been paid. The monthly rent expense amounts to Rwf300. A bill for December truck operating expense has not yet been received; an amount of Rwf400 is owed. Required: Prepare all necessary adjusting entries at December 31, 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
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Prepaid insurance Rwf 600 Unused supplies 500 Bank loan 5,000 Subscription revenue 9,000 |
Salaries payable Rwf 500 Rent expense 3,900 Truck operating expense 4,000
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The following information applies to the fiscal year-end:
- The Rwf600 prepaid insurance is for a one-year policy, effective September 1, 2020.
- A physical count indicates that Rwf300 of supplies is still on hand at December 31.
- Interest on the bank loan is paid on the fifteenth day of each month; the unrecorded interest for the last 15 days of December amounts to Rwf25.
- The Subscription Revenue account consists of a cash receipts for 6- month subscriptions to the corporation’s Computer Trends report; the subscription period began December 1.
- Three days of salary amounting to Rwf300 remain unpaid at December 31, in addition to the previous week’s salaries of Rwf500, which have not yet been paid.
- The monthly rent expense amounts to Rwf300.
- A bill for December truck operating expense has not yet been received; an amount of Rwf400 is owed.
Required: Prepare all necessary
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