Yin & Yang Video has the following unadjusted trial balance as of January 31, 2010: Yin & Yang Video Unadjusted Trial Balance January 31, 2010 Debit Balances Credit Balances Cash 19,000 Accounts Receivable 34,100 Supplies 4,464 Prepaid Insurance 4,800 Equipment 108,000 Notes Payable 45,000 Accounts Payable 9,650 Chea Wynn, Capital 69,400 Chea Wynn, Drawing 23,500 Fees Earned 356,000 Wages Expense 204,000 Rent Expense 41,700 Advertising Expense 19,800 Gas, Electricity, and Water Expense 11,340 $470,704 $480,050 The debits and credit totals are not equal as a result of the following errors: a. The balance of cash was overstated by $10,000. b. A cash receipt of $6,100 was posted as a debit to Cash of $1,600. c. A debit of $3,500 to Accounts Receivable was not posted. d. A return of $415 of defective supplies was erroneously posted as a $451 credit to Supplies. e. An insurance policy acquired at a cost of $800 was posted as a credit to Prepaid Insurance. f. The balance of Notes Payable was overstated by $9,000. g. A credit of $1,450 in Accounts Payable was overlooked when the balance of the account was determined. h. A debit of $2,500 for a withdrawal by the owner was posted as a debit to Chea Wynn, Capital. i. The balance of $18,900 in Advertising Expense was entered as $19,800 in the trial balance. j. Miscellaneous Expense, with a balance of $3,060, was omitted from the trial balance. Instructions: 1. Prepare a corrected unadjusted trial balance as of January 31 of the current year. 2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts Explain.
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.
Yin & Yang Video has the following unadjusted
Yin & Yang Video
Unadjusted Trial Balance
January 31, 2010
Debit Balances Credit Balances
Cash 19,000
Supplies 4,464
Prepaid Insurance 4,800
Equipment 108,000
Notes Payable 45,000
Accounts Payable 9,650
Chea Wynn, Capital 69,400
Chea Wynn, Drawing 23,500
Fees Earned 356,000
Wages Expense 204,000
Rent Expense 41,700
Advertising Expense 19,800
Gas, Electricity, and Water Expense 11,340
$470,704 $480,050
The debits and credit totals are not equal as a result of the following errors:
a. The balance of cash was overstated by $10,000.
b. A cash receipt of $6,100 was posted as a debit to Cash of $1,600.
c. A debit of $3,500 to Accounts Receivable was not posted.
d. A return of $415 of defective supplies was erroneously posted as a $451 credit to Supplies.
e. An insurance policy acquired at a cost of $800 was posted as a credit to Prepaid Insurance.
f. The balance of Notes Payable was overstated by $9,000.
g. A credit of $1,450 in Accounts Payable was overlooked when the balance of the account was determined.
h. A debit of $2,500 for a withdrawal by the owner was posted as a debit to Chea Wynn, Capital.
i. The balance of $18,900 in Advertising Expense was entered as $19,800 in the trial balance.
j. Miscellaneous Expense, with a balance of $3,060, was omitted from the trial balance.
Instructions:
1. Prepare a corrected unadjusted trial balance as of January 31 of the current year.
2. Does the fact that the unadjusted trial balance in (1) is balanced mean that there are no errors in the accounts Explain.
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