Using the adjusted trial balance below, prepare a multiple-step income statement and a statement of owner's of equity for the year ended June 30, 2020. Adjusted trail balance Accounts unadjusted Adjustments Adjusted DR CR DR CR DR CR cash 127000 127000 Account receivable 151000 151000 Allowance for bad debts 12500 7000 19500 Merchandise inventory 187500 1500 186000 Store supplies 58000 33000 25000 Prepaid insurance 72000 24000 48000 Prepaid rent 56000 42000 14000 furniture 800000 800000 Accumulated depreciation on furniture 256000 64000 320000 computer equipment 450000 450000 Accumulated depreciation on computer 45000 45000 Accounts payable 133500 133500 salaries payable 14000 14000 Interest payable 27000 9000 36000 unearned sales revenue 82000 48000 34000 Long term loan 360000 360000 Eva ready capital 898500 898500 Eva ready withdrawl 104000 104000 sales revenue 1043000 48000 1091000 sales discount 7000 7000 sales return & allowance 5500 5500 Cost of good sold 403000 1500 404500 salaries expense 165000 14000 179000 insurance expense 24000 24000 utilities expense 87500 87500 rent expense 126000 42000 168000 Depreciation on furniture 64000 64000 Depreciation on computer 45000 45000 store supply expense 33000 33000 Gain on disposal of old computer 14000 14000 bad debt expense 7000 7000 interest expense 27000 9000 36000 Total 2826500 2826500 287500 287500 2965500 2965500
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.
Using the adjusted
Adjusted trail balance
| Accounts | unadjusted | Adjustments | Adjusted | ||||||
|
|
|
|||||||
| cash | 127000 | 127000 | |||||||
| 151000 | 151000 | ||||||||
| Allowance for |
12500 | 7000 | 19500 | ||||||
| Merchandise inventory | 187500 | 1500 | 186000 | ||||||
| Store supplies | 58000 | 33000 | 25000 | ||||||
| Prepaid insurance | 72000 | 24000 | 48000 | ||||||
| Prepaid rent | 56000 | 42000 | 14000 | ||||||
| furniture | 800000 | 800000 | |||||||
| 256000 | 64000 | 320000 | |||||||
| computer equipment | 450000 | 450000 | |||||||
| Accumulated depreciation on computer | 45000 | 45000 | |||||||
| Accounts payable | 133500 | 133500 | |||||||
| salaries payable | 14000 | 14000 | |||||||
| Interest payable | 27000 | 9000 | 36000 | ||||||
| unearned sales revenue | 82000 | 48000 | 34000 | ||||||
| Long term loan | 360000 | 360000 | |||||||
| Eva ready capital | 898500 | 898500 | |||||||
| Eva ready withdrawl | 104000 | 104000 | |||||||
| sales revenue | 1043000 | 48000 | 1091000 | ||||||
| sales discount | 7000 | 7000 | |||||||
| sales return & allowance | 5500 | 5500 | |||||||
| Cost of good sold | 403000 | 1500 | 404500 | ||||||
| salaries expense | 165000 | 14000 | 179000 | ||||||
| insurance expense | 24000 | 24000 | |||||||
| utilities expense | 87500 | 87500 | |||||||
| rent expense | 126000 | 42000 | 168000 | ||||||
| Depreciation on furniture | 64000 | 64000 | |||||||
| Depreciation on computer | 45000 | 45000 | |||||||
| store supply expense | 33000 | 33000 | |||||||
| Gain on disposal of old computer | 14000 | 14000 | |||||||
| bad debt expense | 7000 | 7000 | |||||||
| interest expense | 27000 | 9000 | 36000 | ||||||
| Total | 2826500 2826500 | 287500 287500 | 2965500 2965500 |
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