The Wheel Place Inc. began operations on March 1 of the current year to provide automotive wheel alignment and balancing services. On March 31 the unadjusted balances of the firm's accounts are as follows: The Wheel Place Inc. Trial Balance March 31, 2010 DR CR Cash$ 2,900 Accounts Receivable 4,350 Supplies 0 Prepaid Rent 4,000 Equipment 25,100 Accumulated Depreciation – Equipment$ 0 Accounts Payable 2,400 Unearned Service Revenue 700 Capital Stock 29,000 Service Revenue 10,550 Depreciation Expense – Equipment 0 Rent Expense 0 Supplies Expense 2,600 Wages Expense 3,700_______ $ 41,850 $ 41,850 The following information is also available: 1)The balance in Prepaid Rent was the amount paid on March 1 to cover the first four months rent. 2)Supplies on hand on March 31 amount to $1,200. 3)The equipment has an estimated life of seven years with a salvage value of $2,000. 4)The company has 3 employees who in total are paid 3,750 for the week. March 31, 2010 falls on a Wednesday. 5)Utility services used during March were estimated at $480. A bill is expected early in April. 6)The balance in Unearned Service Revenue was the amount received on March 15 from a new car dealer to cover alignment and balancing services on all new cars sold by thedealer in March and April. Wheel Place agreed to provide the service at a fixed fee of $350 each month. REQUIRED: a) Prepare the necessary adjusting entries at March 31, 2010 for the addition information given b)Prepare the journal entry on April 2, 2010 to record the payment of the wages to the employees listed in information item #4 above. (assume the company does not use reversing entries)
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 Wheel Place Inc. began operations on March 1 of the current year to provide automotive wheel alignment and balancing services. On March 31 the unadjusted balances of the firm's accounts are as follows:
The Wheel Place Inc.
March 31, 2010
DR CR
Cash$ 2,900
Supplies 0
Prepaid Rent 4,000
Equipment 25,100
Accounts Payable 2,400
Unearned Service Revenue 700
Capital Stock 29,000
Service Revenue 10,550
Depreciation Expense – Equipment 0
Rent Expense 0
Supplies Expense 2,600
Wages Expense 3,700_______
$ 41,850 $ 41,850
The following information is also available:
1)The balance in Prepaid Rent was the amount paid on March 1 to cover the first four months rent.
2)Supplies on hand on March 31 amount to $1,200.
3)The equipment has an estimated life of seven years with a salvage value of $2,000.
4)The company has 3 employees who in total are paid 3,750 for the week. March 31, 2010 falls on a Wednesday.
5)Utility services used during March were estimated at $480. A bill is expected early in April.
6)The balance in Unearned Service Revenue was the amount received on March 15 from a new car dealer to cover alignment and balancing services on all new cars sold by thedealer in March and April. Wheel Place agreed to provide the service at a fixed fee of $350 each month.
REQUIRED:
b)Prepare the
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
