Trial Balance as at June 30, 2022 A/C Name D R C R Cash 1,400,000 Accounts receivable 1,400,000 Allowance for bad debt 100,000 Merchandise Inventory 1,400,000 Store Supplies 400,000 Prepaid Insurance 211,500 Prepaid rent 420,000 Furniture and fixtures 1,000,000 Accumulated depreciation-Furniture and Fixtures 99,000 Motor Truck 1,200,000 Accumulated depreciation - Motor Truck Accounts payable 50,000 Salary payable Interest payable 28,000 Unearned Sales revenue 205,000 Long-term loan 2,500,000 Gregg's, Capital 3,500,000 Gregg's, Withdrawals 125,000 Sales revenue 4,201,900 Sales discount 160,500 Sales returns and allowances 145,400 Cost of goods sold 1,055,000 Salaries expense 808,000 Insurance Expense 211,500 Utilities Expense 325,000 Rent Expense 480,000 Depreciation Expense – Furniture & Fixtures Depreciation Expense – Motor Truck Store Supplies Expense Gain on Disposal of Old Motor Truck 58,000 Bad-Debt Expense Interest Expense 10,741,900 10,741,900 Trial Balance ACCT1002 – Introduction to Financial Accounting Assignment # 2 Page | 19 The following additional information is available at June 30, 2022: (i) Store Supplies on hand at June 30, 2022 amounted to $355,000. (ii) Insurance of $211,500 was paid on April 1, 2022, for 9-months to December 2022 (iii) Rent was prepaid on March 1, 2022, for 7-months to September 2022. (iv) The furniture and fixtures have an estimated useful life of 10 years and is being depreciated on the straight-line method down to a residual value of $10,000. (v) The motor truck was acquired on December 1, 2021, and is being depreciated over 5 years on the double-declining balance method of depreciation, down to a residue of $15,000 (vi) Salaries earned by employees not yet paid amounted to $188,000 at June 30, 2022. (vii) Accrued interest expense as of June 30, 2022, $105,000. (viii) On June 30, 2022, $185,000 of the previously unearned sales revenue had been earned. (ix) The aging of the Accounts Receivable schedule at June 30, 2022 indicated that the Allowance for Bad Debts should be $140,000. (x) After making all other adjustments, a physical count of inventory was done, which reveals that there was $1,380,500 worth of inventory on hand at June 30,2022 Other data: (xi) The business is expected to make principal payments totalling $600,000 towards the loan during the fiscal year to June 30 ,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.
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