Below is the unadjusted trial balance for Walton Anvils as of December 31, 2016, and the data for the adjustments. Walton Anvils Unadjusted Trial Balance December 31, 2016 Balance Account Title Debt Credit Cash $ 16,900.00 Accounts Receivable 17,500 Prepaid Rent 2,500 Office Supplies 1,900 Equipment 23,000 Accumulated Depreciation - Equipment $ 7,000.00 Accounts Payable 6,200.00 Salaries Payable Unearned Revenue 5,600.00 Common Stock 28,000.00 Retained Earnings 1,600.00 Dividends 4,500 Service Revenue 20,800.00 Salaries Expense 2,900 Rent Expense Depreciation Expense - Equipment Supplies Expense Total $ 69,200.00 $ 69,200.00 Adjustment Data a. Unearned revenue still unearned at December 31, 2016 $1,800 b. Prepaid rent still in force at December 31, 2016 $2,300 c. Office supplies used $1,400 d. Depreciation $380 e. Accrued Salaries Expense at December 31, 2016 $210 1. Prepare the income statement 2. Prepare a statement of retained earnings 3. Prepare a classified balance sheet in report form
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.
Below is the unadjusted
| Walton Anvils | ||
| Unadjusted Trial Balance | ||
| December 31, 2016 | ||
| Balance | ||
| Account Title | Debt | Credit |
| Cash | $ 16,900.00 | |
| Accounts Receivable | 17,500 | |
| Prepaid Rent | 2,500 | |
| Office Supplies | 1,900 | |
| Equipment | 23,000 | |
| $ 7,000.00 | ||
| Accounts Payable | 6,200.00 | |
| Salaries Payable | ||
| Unearned Revenue | 5,600.00 | |
| Common Stock | 28,000.00 | |
| 1,600.00 | ||
| Dividends | 4,500 | |
| Service Revenue | 20,800.00 | |
| Salaries Expense | 2,900 | |
| Rent Expense | ||
| Depreciation Expense - Equipment | ||
| Supplies Expense | ||
| Total |
$ 69,200.00 |
$ 69,200.00 |
Adjustment Data
| a. Unearned revenue still unearned at December 31, 2016 | $1,800 |
| b. Prepaid rent still in force at December 31, 2016 | $2,300 |
| c. Office supplies used | $1,400 |
| d. Depreciation | $380 |
| e. Accrued Salaries Expense at December 31, 2016 | $210 |
1. Prepare the income statement
2. Prepare a statement of retained earnings
3. Prepare a classified balance sheet in report form
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