Evan Roberts owns a business, Shores Sports, that rents canoes and kayaks. Below is the adjusted trial balance at December 31. Account No. Debit Balances Credit Balances Cash 11 1,500 Accounts Receivable 12 2,000 Interest Receivable 13 100 Prepaid Insurance 14 1,600 Notes Receivable (long-term) 16 2,800 Equipment 18 15,000 Accumulated Depreciation 19 3,000 Accounts Payable 21 2,400 Accrued Expenses Payable 22 3,920 Income Taxes Payable 23 2,700 Unearned Rent Fees 25 500 Evan Roberts, Capital 31 7,700 Evan Roberts, Drawing 32 2,000 Rent Fees Earned 41 37,000 Furniture Rental Revenue 42 1,200 Interest Revenue 43 100 Wages Expense 51 19,000 Depreciation Expense 52 1,800 Utilities Expense 53 320 Insurance Expense 54 700 Maintenance Expense 55 9,000 Income Tax Expense 56 2,700 58,520 58,520 The entry required to close the revenue and expense accounts at the end of the period includes a a. debit for $37,000 b. credit for $38,300 c. debit for $38,200 d. credit for $37,000
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.
Evan Roberts owns a business, Shores Sports, that rents canoes and kayaks. Below is the adjusted
Account No. Debit Balances Credit Balances
Cash 11 1,500
Interest Receivable 13 100
Prepaid Insurance 14 1,600
Notes Receivable
(long-term) 16 2,800
Equipment 18 15,000
Accumulated
Accounts Payable 21 2,400
Accrued Expenses
Payable 22 3,920
Income Taxes Payable 23 2,700
Unearned Rent Fees 25 500
Evan Roberts, Capital 31 7,700
Evan Roberts, Drawing 32 2,000
Rent Fees Earned 41 37,000
Furniture Rental
Revenue 42 1,200
Interest Revenue 43 100
Wages Expense 51 19,000
Depreciation Expense 52 1,800
Utilities Expense 53 320
Insurance Expense 54 700
Maintenance Expense 55 9,000
Income Tax Expense 56 2,700
58,520 58,520 The entry required to close the revenue and expense accounts at the end of the period includes a
a. debit for $37,000
b. credit for $38,300
c. debit for $38,200
d. credit for $37,000
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