Affordable Lawn Care, Inc., provides lawn mowing services to both commercial and residential customers. The company performs adjusting entries on a monthly basis, whereas closing entries are prepared annually at December 31. An adjusted trial balance dated December, current year follows Affordable Lawn Care, Inc. Adjusted Trial Balance December 31, current year Debit Credits Cash…………………………………………… $117,050 Accounts receivable……………………………. 9,600 Unexpired insurance…………………………. 16,000 Prepaid rent………………………………………. .6,000 Supplies………………………………………….. 2,150 Trucks…………………………………………… 300,000 Accumulated depreciation: truck $240,000 Mowing equipment………………………. 40,000 Accumulated depreciation: mowing equipment 24,000 Accounts payables……………………………. 3,000 Notes payables………………………….................................................... 100,000 Salaries payables……............................................................................. 1,800 Interest payables…………………............................................................ 300 Income taxes payables........................................................................ 2,100 Unearned mowing revenue……........................................................ 1,800 Capital Stock............................................................................................. 40,000 Retained earnings…… ........................................................................... 60,000 Dividends……………………… 10,000 Mowing revenue earned………………..................................................... 340,000 Insurance expense………………. 4,800 Office rent expense………………….. 72,000 Supplies expense…………………….. 10,400 Salary expense………………………….. 120,000 Depreciation expense: truck……….. 60,000 Depreciation expense: mowing equipment 8,000 Repair and maintenance expense………. 6,000 Fuel expense………………………………… 3,000 Miscellaneous expense………………… 10,000 Interest expense……………………………. 6,000 Income taxes expense……………….. 12,000 $813,000 $813,000 I need do: Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company’s balance sheet dated December 31, current year Prepare the necessary year end closing entries Prepare an after closing trial balance Using the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity
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.
Affordable Lawn Care, Inc., provides lawn mowing services to both commercial and residential customers. The company performs
Affordable Lawn Care, Inc.
Adjusted Trial Balance
December 31, current year
Debit Credits
Cash…………………………………………… $117,050
Accounts receivable……………………………. 9,600
Unexpired insurance…………………………. 16,000
Prepaid rent………………………………………. .6,000
Supplies………………………………………….. 2,150
Trucks…………………………………………… 300,000
Mowing equipment………………………. 40,000
Accumulated depreciation: mowing equipment 24,000
Accounts payables……………………………. 3,000
Notes payables………………………….................................................... 100,000
Salaries payables……............................................................................. 1,800
Interest payables…………………............................................................ 300
Income taxes payables........................................................................ 2,100
Unearned mowing revenue……........................................................ 1,800
Capital Stock............................................................................................. 40,000
Dividends……………………… 10,000
Mowing revenue earned………………..................................................... 340,000
Insurance expense………………. 4,800
Office rent expense………………….. 72,000
Supplies expense…………………….. 10,400
Salary expense………………………….. 120,000
Depreciation expense: truck……….. 60,000
Depreciation expense: mowing equipment 8,000
Repair and maintenance expense………. 6,000
Fuel expense………………………………… 3,000
Miscellaneous expense………………… 10,000
Interest expense……………………………. 6,000
Income taxes expense……………….. 12,000
$813,000 $813,000
I need do:
- Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company’s balance sheet dated December 31, current year
- Prepare the necessary year end closing entries
- Prepare an after closing trial balance
- Using the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity
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