Income Statement, Statement of Owner's Equity, and Balance Sheet Paulson's Pet Store completed the Adjusted Trial Balance for the year ended December 31, 20--. Owner's equity as of January 1, 20--, was $495,830. The current portion of Note Payable is $3,000. Paulson's Pet Store End-of-Period Spreadsheet (Partial) December 31, 20-- ACCOUNT TITLE ADJUSTED TRIAL BALANCE DEBIT CREDIT Cash 23,440.00 Accounts Receivable 9,370.00 Merchandise Inventory 64,700.00 Estimated Returns Inventory 1,300.00 Supplies 2,300.00 Prepaid Insurance 1,800.00 Land 90,000.00 Building 350,000.00 Accum. Depr.—Building 20,000.00 Store Equipment 120,000.00 Accum. Depr.—Store Equipment 3,600.00 Accounts Payable 9,570.00 Customer Refunds Payable 1,600.00 Wages Payable 1,200.00 Sales Tax Payable 3,440.00 Note Payable 24,000.00 B. Paulson, Capital 525,830.00 B. Paulson, Drawing 4,700.00 Income Summary 59,100.00 64,700.00 700.00 1,300.00 Sales 326,030.00 Sales Returns and Allowances 5,360.00 Purchases 162,650.00 Purchases Returns and Allowances 4,080.00 Purchases Discounts 3,200.00 Freight-In 1,600.00 Wages Expense 69,300.00 Advertising Expense 1,100.00 Supplies Expense 900.00 Phone Expense 2,736.00 Utilities Expense 2,864.00 Insurance Expense 1,600.00 Depr. Expense—Building 10,000.00 Depr. Expense—Store Equipment 1,800.00 Miscellaneous Expense 600.00 Interest Expense 630.00 988,550.00 988,550.00 320,940.00 399,310.00 Net Income 78,370.00
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.
Income Statement, Statement of Owner's Equity, and Balance Sheet
Paulson's Pet Store completed the Adjusted
| Paulson's Pet Store End-of-Period Spreadsheet (Partial) December 31, 20-- |
||
|---|---|---|
| ACCOUNT TITLE | ADJUSTED TRIAL BALANCE | |
| DEBIT | CREDIT | |
| Cash | 23,440.00 | |
| Accounts Receivable | 9,370.00 | |
| Merchandise Inventory | 64,700.00 | |
| Estimated Returns Inventory | 1,300.00 | |
| Supplies | 2,300.00 | |
| Prepaid Insurance | 1,800.00 | |
| Land | 90,000.00 | |
| Building | 350,000.00 | |
| Accum. Depr.—Building | 20,000.00 | |
| Store Equipment | 120,000.00 | |
| Accum. Depr.—Store Equipment | 3,600.00 | |
| Accounts Payable | 9,570.00 | |
| Customer Refunds Payable | 1,600.00 | |
| Wages Payable | 1,200.00 | |
| Sales Tax Payable | 3,440.00 | |
| Note Payable | 24,000.00 | |
| B. Paulson, Capital | 525,830.00 | |
| B. Paulson, Drawing | 4,700.00 | |
| Income Summary | 59,100.00 | 64,700.00 |
| 700.00 | 1,300.00 | |
| Sales | 326,030.00 | |
| Sales Returns and Allowances | 5,360.00 | |
| Purchases | 162,650.00 | |
| Purchases Returns and Allowances | 4,080.00 | |
| Purchases Discounts | 3,200.00 | |
| Freight-In | 1,600.00 | |
| Wages Expense | 69,300.00 | |
| Advertising Expense | 1,100.00 | |
| Supplies Expense | 900.00 | |
| Phone Expense | 2,736.00 | |
| Utilities Expense | 2,864.00 | |
| Insurance Expense | 1,600.00 | |
| Depr. Expense—Building | 10,000.00 | |
| Depr. Expense—Store Equipment | 1,800.00 | |
| Miscellaneous Expense | 600.00 | |
| Interest Expense | 630.00 | |
| 988,550.00 | 988,550.00 | |
| 320,940.00 | 399,310.00 | |
| Net Income | 78,370.00 |
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