Valley Realty Unadjusted Trial Balance July 31, 2019 Account No. Debit Balances 52,500 100,100 12,600 Credit Balances Cash ..... 11 Accounts Receivable.. 12 Prepaid Insurance .. Office Supplies.... Land .... Accounts Payable Unearned Rent... Notes Payable.... Cindy Getman, Capital. Cindy Getman, Drawing Fees Earned..... Salary and Commission Expense.. Rent Expense..... Advertising Expense... Automobile Expense Miscellaneous Expense 13 14 2,800 16 21 21,000 22 23 31 87,500 32 44,800 41 591,500 51 385,000 49,000 32,200 15,750 52 53 54 59 5,250 700,000 700,000
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.
Journal entries and
Valley Realty acts as an agent in buying, selling, renting, and managing real estate . The unadjusted trial balance on July 31,2019, follows:
The following business transactions were completed by Valley Realty during August 2019:
|
Aug. 1. |
Purchased office supplies on account, $3,150. |
|
2. |
Paid rent on office for month,$7,200. |
|
3. |
Received cash from clients on account, $83,900. |
|
5. |
Paid insurance premiums,$12,000. |
|
9. |
Returned a portion of the office supplies purchased on August 1, receiving full credit for their cost, $400. |
|
Aug. 17. |
Paid advertising expenses, $8,000. |
|
23. |
Paid creditors on account, $13,750. |
Enter the following transactions on Page 19 of the two-column journal:
| 29. | Paid miscellaneous expenses, $1,700. |
| 30. | Paid automobile expense (including rental charges for an automobile), $2,500. |
| 31. | Discovered an error in computing a commission during July; received cash from the salesperson for the overpayment,$2,000. |
| 31. | Paid salaries and commissions for the month , $53,000 |
| 31. | Recorded revenue earned and billed to clients during the month, $183,500. |
| 31. | Purchased land for a future building site for $75,000, paying $7,500 in cash and giving a note payable for the remainder. |
| 31. | Withdrew cash for personal use, $1000. |
| 31. | Rented land purchased on August 31 to a local university for use as a parking lot during football season (September, October , and November); received advance payment of $5,000. |
Instructions
1. Record the August 1 balance of each account in the appropriate balance column of a four-column account, write Balance in the item section, and place a check mark (√) in the Posting Reference column.
2. Journalize the transactions for August in a two-column journal beginning on Page 18.
3. Post to the ledger, extending the account balance to the appropriate balance column after each posting.
4. Prepare an unadjusted trial balance of the ledger as of August 31, 2019.
5. Assume that the August 31 transaction for Cindy Getman's cash withdrawal should have been $10,000.(a) Why did the unadjusted trial balance in (4) balance ? (b) Journalize the correcting entry. (c) Is this error a transposition or slide?
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