Garvey Company's unadjusted trial balance includes the following account balances as of December 31, 2020: Debits Credits $ 69,030 116,900 1,320 139,300 8,750 50,300 279, 200 Cash Accounts Receivable Interest Receivable Supplies Prepaid Insurance Notes Receivable (short-term) Equipment Accumulated Depreciation Accounts Payable Salaries and Wages Payable Deferred Revenue $ 64,800 104,600 21,700 9,300 Notes Payable (long-term) 87, 800 217, 200 144, 200 40,700 22,000 Common Shares Retained Earnings Service Revenue Interest Revenue Supplies Expense Repair and Maintenance Expense Rent Expense Depreciation Expense Insurance Expense Salaries and Wages Expense 26,550 17,900 3,050 Totals $712,300 $712,300 The following data are available to determine adjusting entries: A) Insurance purchased at the beginning of July for $8,750 provided coverage for twelve months (July 2020 through June 2019). The insurance coverage for July through December totaling $4,375 has now been used. B) The company estimates $8,200 in depreciation each year. C) A count showed $86.200 of supplies on hand at the end of the year. D) An additional $270 of interest has been earned but has not yet been collected on the outstanding notes receivable. E) Services in the amount of $5,650 were performed for customers who had previously paid in advance. F) Services in the amount of $2,100 were performed; these services have not yet been billed or recorded
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
