Wilm Schmidt, the owner of Wilm’s Window Washing Services, had difficulty getting the debits to equal credits on the January 31, 2023, trial balance. Wilm’s Window Washing Services Trial Balance January 31, 2023 Debit Credit Cash $ 13,200 Accounts receivable 10,840 Prepaid insurance 4,000 Equipment 40,000 Accounts payable $ 11,000 Wilm Schmidt, capital 61,000 Wilm Schmidt, withdrawals 10,560 Service revenues 67,300 Salaries expense 33,600 Insurance expense 6,800 Maintenance expense 14,600 Utilities expense 6,800 Total $ 140,400 $ 139,300 The following errors were discovered: Schmidt did not post a $3,500 purchase of equipment on credit. In posting a $2,200 collection from a credit customer, Schmidt debited Accounts Receivable and credited Cash. In posting a cash receipt, Schmidt correctly debited Cash for $2,550 but incorrectly credited Accounts Receivable for $5,250. In posting a $3,800 payment on account, Schmidt debited Accounts Payable but forgot to post the credit to Cash. In posting the entry for services of $3,400 performed for a customer on credit, Schmidt debited Accounts Receivable but credited Maintenance Expense. Required: Prepare a corrected trial balance.
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.
Wilm Schmidt, the owner of Wilm’s Window Washing Services, had difficulty getting the debits to equal credits on the January 31, 2023,
| Wilm’s Window Washing Services | ||||||
| Trial Balance | ||||||
| January 31, 2023 | ||||||
| Debit | Credit | |||||
| Cash | $ | 13,200 | ||||
| 10,840 | ||||||
| Prepaid insurance | 4,000 | |||||
| Equipment | 40,000 | |||||
| Accounts payable | $ | 11,000 | ||||
| Wilm Schmidt, capital | 61,000 | |||||
| Wilm Schmidt, withdrawals | 10,560 | |||||
| Service revenues | 67,300 | |||||
| Salaries expense | 33,600 | |||||
| Insurance expense | 6,800 | |||||
| Maintenance expense | 14,600 | |||||
| Utilities expense | 6,800 | |||||
| Total | $ | 140,400 | $ | 139,300 | ||
The following errors were discovered:
- Schmidt did not post a $3,500 purchase of equipment on credit.
- In posting a $2,200 collection from a credit customer, Schmidt debited Accounts Receivable and credited Cash.
- In posting a cash receipt, Schmidt correctly debited Cash for $2,550 but incorrectly credited Accounts Receivable for $5,250.
- In posting a $3,800 payment on account, Schmidt debited Accounts Payable but forgot to post the credit to Cash.
- In
posting the entry for services of $3,400 performed for a customer on credit, Schmidt debited Accounts Receivable but credited Maintenance Expense.
Required:
Prepare a corrected trial balance.
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