31 Jolene Upton, Capital 32 Jolene Upton, Drawing 11 Cash 12 Accounts Receivable 14 Supplies 41 Fees Earned 15 Prepaid Rent 16 Prepaid Insurance 18 Office Equipment 51 Salary Expense 52 Rent Expense 53 Supplies Expense 19 Accumulated Depreciation-Office Equipment 54 Depreciation Expense 21 Accounts Payable 22 Salaries Payable 55 Insurance Expense 59 Miscellaneous Expense 23 Unearned Fees
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.
For the past several years, Jolene Upton has operated a part-time
consulting business from her home. As of July 1, 2019, Jolene decided to
move to rented quarters and to operate the business, which was to be
known as Gourmet Consulting, on a full-time basis. Gourmet Consulting
entered into the following transactions during July:
July 1. The following assets were received from Jolene Upton: cash, $19,000;
There were no liabilities received.
1. Paid three months' rent on a lease rental contract, $6,000.
2. Paid the premiums on property and casualty insurance policies, $4,500.
4. Received cash from clients as an advance payment for services to be provided
and recorded it as unearned fees, $8,000.
5. Purchased additional office equipment on account from Office Necessities Co., $5,100.
6. Received cash from clients on account, $12,750.
10. Paid cash for a newspaper advertisement, $500.
12. Paid Office Necessities Co. for part of the debt incurred on July 5, $3,000.
12. Provided services on account for the period July 1-12, $14,200.
14. Paid receptionist for two weeks' salary, $1,500.
Record the following transactions on Page 2 of the journal:
17. Received cash from cash clients for fees earned during the period
July 1-17, $10,400.
18. Paid cash for supplies, $1,000.
20. Provided services on account for the period July 13-20, $9,000.
24. Received cash from cash clients for fees earned for the period July 17-24, $8,500.
26. Received cash from clients on account, $12,000.
27. Paid receptionist for two weeks' salary, $1,500.
29. Paid telephone bill for July, $325.
31. Paid electricity bill for July, $675.
31. Received cash from cash clients for fees earned for the period July 25-31, $7,100.
31. Provided services on account for the remainder of July, $5,500.
31. Jolene withdrew $20,000 for personal use.
Instructions
1. Journalize each transaction in a two-column journal starting on
Page 1, referring to the following chart of accounts in selecting the
accounts to be debited and credited. (Do not insert the account
numbers in the journal at this time.)
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2. Post the journal to a ledger of four-column accounts.
3. Prepare an unadjusted
4. At the end of July, the following adjustment data were
assembled. Analyze and use these data to complete parts (5) and
(6).
a. Insurance expired during July is $375.
b. Supplies on hand on July 31 are $2,850.
c.
d. Accrued receptionist salary on July 31 is $140.
e. Rent expired during July is $2,000.
f. Unearned fees on July 31 are $3,000.
5. (Optional) Enter the unadjusted trial balance on an end-of-
period spreadsheet and complete the spreadsheet.
6. Journalize and post the
entries on Page 3 of the journal.
7. Prepare an adjusted trial balance.
8. Prepare an income statement, a statement of owner's equity, and
a balance sheet.
9. Prepare and
on Page 4 of the journal. Indicate closed accounts by inserting a
line in both Balance columns opposite the closing entry.
10. Prepare a post-closing trial balance.
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