Working Backward From Adjusted Trial Balance To Determine Adjusting Entries The partial spreadsheet shown below is taken from the books of Sunstate Comput Supply, a business owned by Michelle Thibeault, for the year ended December 31, 20--. Sunstate is on the periodic inventory system. Required: 1. Determine the adjusting entries by analyzing the difference between the adjusted trial balance and the trial balance. Sunstate Computer Supply End-of-Period Spreadsheet For Year Ended December 31, 20-- TRIAL BALANCE ADJUSTMENTS ADJUSTED TRIAL BALANCE ACCOUNT TITLE DEBIT CREDIT DEBIT CREDIT DEBIT CREDIT Cash 22,000 22,000 Accounts Receivable 15,400 15,400 Merchandise Inventory 82,500 93,500 Estimated Returns Inventory 3,520 4,730 Supplies 8,800 3,630 Prepaid Insurance 5,940 4,180 Land 143,000 143,000 Building 275,000 275,000 Accumulated Depreciation-Building 110,000 123,750 Store Equipment 110,000 110,000 Accumulated Depreciation-Store Equipment 44,000 49,500 Accounts Payable 10,560 10,560 Customer Refunds Payable 3,850 6,270 Wages Payable 3,850 Sales Tax Payable 6,490 6,490 Unearned Rent Revenue 9,790 4,950 M. Thibeault, Capital 312,741 312,741 M. Thibeault, Drawing 28,600 28,600 Income Summary 82,500 93,500 3,520 4,730 Sales 577,654 577,654 Sales Returns and Allowances 18,370 15,950 Rent Revenue 4,840 Purchases 137,500 137,500 Purchases Returns and Allowances 1,540 1,540 Purchases Discounts 1,980 1,980 Freight-In 2,310 2,310 Wages Expense 137,500 141,350 Advertising Expense 14,300 14,300 Sunplies Expense 5.170
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.
Adjusting entries are those entries which are passed at the end of accounting period in order to correctly reflect income, expenses, assets and liabilities of the business.
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