Instructions: 1. Journalize the December journal entries 2. Post transactions to ledgers 3. Prepare an unadjusted trial balance 4. Journalize and post adjusting entries. Additional information for adjustments is below. a. Adjust for rent paid on December 3. b. The equipment purchased on December 5 has a seven-year useful life and $4,400 salvage value. c. Seven hundred dollars of the office supplies purchased on December 8 are still on hand. d. During December, the company earned $1,500 of the $6,000 advance payment from Barnhill. e. On December 31, six days rent has been earned from Chancellor Construction. 5. Prepare an adjusted trial balance 6. Prepare an income statement, statement of retained earnings and a balance sheet. 7. Journalize and post-closing entries. 8 Prepare a post-closing trial balance. Day Instructions 1 Issued 50,000 shares of common stock to Tracy and Sarah Spicer in exchange for $250,000. 3 Paid $7,500 to Cousins Realty for three months' rent in advance. 5 Purchased $80,000 of equipment formerly owned by a business that has gone bankrupt. 8 Purchased $1,000 of office supplies from Fuller Office Supply on Month Dec account. Terms n/30, 8 Received $6,000 in advance from Barnhill Realty Company. 15 Rented equipment for $9,500 (excluding advance payment from Barnhill) and $12,800 on account for the first half of the month. 15 Paid salaries for the first two weeks in December, $4,400. 24 Collected $3,600 on accounts receivable. 26 Rented equipment to Chancellor Construction at a rate of $75 per day. 27 Purchased a one-year insurance policy for $3,600. 29 Received a bill from Topanga Utilities for $700 that is due in 30 days. 29 Received a bankruptcy notice regarding Dickerson Electric and wrote off the $425 accounts receivable balance. 30 Paid salaries for the last two weeks in December, $4,400. 31 Rented equipment for $9,500 and $12,800 on account for the second half of the month.
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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