Sears Editing Company Unadjusted Trial Balance January 11, 20Y1 Debit Credit Balances Balances Cash 7,500 Accounts Receivable 38,400 Prepaid Insurance 7,200 Supplies |1,980 Land 112,500 Building 150,250 Accumulated Depreciation-Building 87,550 Equipment 135,300 Accumulated Depreciation-Equipment 97,950 Accounts Payable 12,150 Unearned Rent 6,750 Common Stock 75,000 Retained Earnings 146,000 Dividends 15,000 Fees Earned 324,600 Salaries and Wages Expense | 193,370 Utilities Expense | 42,375 Advertising Expense 22,800 Repairs Expense 17,250 Miscellaneous Expense 6,075 750,000 750,000
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.
Sears Editing Company is a small editorial services company owned and
operated by Deloris Sears. On January 31, 20Y1, the end of the current year, Sears Editing Company's accounting cleric prepared the following
unadjusted
The data needed to determine year-end adjustment are as follows:
. Unexpired insurance at January 31, $2,400.
. Supplies on hand at January 31, $250.
.
. Depreciation of equipment for the year, $3,500,
. Rent unearned at January 31, $2,750.
. Accrued salaries and wages at January 31, $1,800.
. Fees earned but unbilled on January 31, $15,000.
Instructions
1. Journalize the adjusting entries using the following additional
accounts: Salaries and Wages Payable; Rent Revenue. Insurance
Expense; Depreciation Expense-Building: Depreciation Expense-
Equipment, and Supplies Expense.
2. Determine the balances of the accounts affected by the adjusting
entries, and prepare an adjusted trial balance.
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