sting entries are performed on a monthly basis. An unadjusted trial balance dated December 31, 2015, follows. (Bear in mind that adjusting entries have already been made for the first 11 months of 2015, but not for December.) ALPINE EXPEDITIONS UNADJUSTED TRIAL BALAN
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.
Preparing Adjusting Entries and Determining Account Balances
Alpine E xpeditions operates a mountain climbing school in Colorado. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled Unearned Client Revenue. Adjusting entries are performed on a monthly basis. An unadjusted
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ALPINE EXPEDITIONS UNADJUSTED TRIAL BALANCE DECEMBER 31, 2015 |
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Cash |
$ 13,900 |
|
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Accounts receivable |
78,000 |
|
|
Unexpired insurance |
18,000 |
|
|
Prepaid advertising |
2,200 |
|
|
Climbing supplies |
4,900 |
|
|
Climbing equipment |
57,600 |
|
|
Accumulated |
|
$ 38,400 |
|
Accounts payable |
|
1,250 |
|
Notes payable |
|
10,000 |
|
Interest payable |
|
150 |
|
Income taxes payable |
|
1,200 |
|
Unearned client revenue |
|
9,600 |
|
Capital stock |
|
17,000 |
|
|
|
62,400 |
|
Client revenue earned |
|
188,000 |
|
Advertising expense |
7,400 |
|
|
Insurance expense |
33,000 |
|
|
Rent expense |
16,500 |
|
|
Climbing supplies expense |
8,400 |
|
|
Repairs expense |
4,800 |
|
|
Depreciation expense: climbing equipment |
13,200 |
|
|
Salaries expense |
57,200 |
|
|
Interest expense |
150 |
|
|
Income taxes expense |
12,750 |
|
|
|
$328,000 |
$328,000 |
Other Data
1. Accrued but unrecorded fees earned as of December 31 amount to $6,400.
2. Records show that $6,600 of cash receipts originally recorded as unearned client revenue had been earned as of December 31.
3. The company purchased a 12-month insurance policy on June 1, 2015, for $36,000.
4. On December 1, 2015, the company paid $2,200 for numerous advertisements in several climbing magazines. Half of these advertisements have appeared in print as of December 31.
5. Climbing supplies on hand at December 31 amount to $2,000.
6. All climbing equipment was purchased when the business first formed. The estimated life of the equipment at that time was four years (or 48 months).
7. On October 1, 2015, the company borrowed $10,000 by signing an eight-month, 9 percent note payable. The entire note, plus eight months’ accrued interest, is due on June 1, 2016.
8. Accrued but unrecorded salaries at December 31 amount to $3,100.
9. Estimated income taxes expense for the entire year totals $14,000. Taxes are due in the first quarter of 2016.
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Determine the amount at which each of the following accounts will be reported in the company’s balance sheet dated December 31.
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