Wedona Energy Consultants prepares adjusting entries monthly. Based on an analysis of the unadjusted trial balance at January 31, 2023, the following Information was available for the preparation of the January 31, 2023, month-end adjusting entries: a. Equipment purchased on November 1 of this accounting period for $12,000 is estimated to have a useful life of 2 years. After 2 years of use. It is expected that the equipment will be scrapped due to technological obsolescence. b. Of the $10,400 balance in Unearned Consulting Revenue, $7,700 had been earned. c. The Prepaid Rent account showed a balance of $10.500. This was paid on January 1 of this accounting period and represents six months of rent commencing on the same date. d. Accrued wages at January 31 totalled $17,500. e. One month of Interest had accrued at the rate of 6% per year on a $22,000 note payable. f. Unrecorded and uncollected consulting revenues at month-end were $5,650. g. A $2,610 Insurance policy was purchased on April 1 of the current accounting period and debited to the Prepaid Insurance account. Coverage began April 1 for 18 months. h. The monthly depreciation on the office furniture was $575. L Repair revenues accrued at month-end totalled $2,400. J. The Store Supplies account had a balance of $700 at the beginning of January. During January, $1,680 of supplies were purchased and debited to the Store Supplies account. At month-end, a count of the supplies revealed a balance of $550. Assume Wedona Energy uses the straight-line method to depreciate its assets. Required: Prepare adjusting journal entries for the month ended January 31, 2023, based on the above.
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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