A partial adjusted trial balance of Piper Company at January 31, 2020, shows the following. Piper CompanyAdjusted Trial BalanceJanuary 31, 2020 Debit Credit Supplies $ 700 Prepaid Insurance 2,400 Salaries and Wages Payable $ 800 Unearned Service Revenue 750 Supplies Expense 950 Insurance Expense 400 Salaries and Wages Expense 1,800 Service Revenue 2,000 Instructions Answer the following questions, assuming the year begins January 1. a. If the amount in Supplies Expense is the January 31 adjusting entry, and $850 of supplies was purchased in January, what was the balance in Supplies on January 1? b. If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? c. If $2,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2019? d. If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenue at December 31, 2019?
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.
A partial adjusted
| Piper Company Adjusted Trial Balance January 31, 2020 |
||||
| Debit | Credit | |||
| Supplies | $ 700 | |||
| Prepaid Insurance | 2,400 | |||
| Salaries and Wages Payable | $ 800 | |||
| Unearned Service Revenue | 750 | |||
| Supplies Expense | 950 | |||
| Insurance Expense | 400 | |||
| Salaries and Wages Expense | 1,800 | |||
| Service Revenue | 2,000 |
Instructions
Answer the following questions, assuming the year begins January 1.
a. If the amount in Supplies Expense is the January 31
b. If the amount in Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased?
c. If $2,500 of salaries was paid in January, what was the balance in Salaries and Wages Payable at December 31, 2019?
d. If $1,600 was received in January for services performed in January, what was the balance in Unearned Service Revenue at December 31, 2019?
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