Journalizing adjusting entries and subsequent journal entries Lopez Landscaping has the following data for the December 31 adjusting entries: Each Friday, Lopez pays employees for the current Week’s work. The amount of the weekly payroll is $6,500 for a five-day workweek. This year, December 31 falls on a Wednesday. Lopez will pay its employees on January Z. On January 1 of the current year, Lopez purchases an insurance policy that covers two years, $7,500. The beginning balance of Office Supplies was $3,700. During the year, Lopez purchased office supplies for $5,800, and at December 31 the office supplies on hand total $3,000. During December, Lopez designed a landscape plan and the client prepaid $6,000. Lopez recorded this amount as Unearned Revenue. The job will take several months to complete, and Lopez estimates that the company has earned 70% of the total revenue during the current year. At December 31, Lopez had earned $7,500 for landscape services completed for Tomball Appliances. Tomball has stated that it will pay Lopez on January 10. Depreciation for the current year includes Equipment, $3,800; and Trucks, $1,400. Lopez has incurred $250 of interest expense on a $350 interest payment due on January 15. Requirements Journalize the adjusting entry needed on December 31 for each of the previous items affecting Lopez Landscaping. Assume Lopez records adjusting entries only at the end of the year. Journalize the subsequent journal entries for adjusting entries
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.
Journalizing
Lopez Landscaping has the following data for the December 31 adjusting entries:
- Each Friday, Lopez pays employees for the current Week’s work. The amount of the weekly payroll is $6,500 for a five-day workweek. This year, December 31 falls on a Wednesday. Lopez will pay its employees on January Z.
- On January 1 of the current year, Lopez purchases an insurance policy that covers two years, $7,500.
- The beginning balance of Office Supplies was $3,700. During the year, Lopez purchased office supplies for $5,800, and at December 31 the office supplies on hand total $3,000.
- During December, Lopez designed a landscape plan and the client prepaid $6,000. Lopez recorded this amount as Unearned Revenue. The job will take several months to complete, and Lopez estimates that the company has earned 70% of the total revenue during the current year.
- At December 31, Lopez had earned $7,500 for landscape services completed for Tomball Appliances. Tomball has stated that it will pay Lopez on January 10.
Depreciation for the current year includes Equipment, $3,800; and Trucks, $1,400.- Lopez has incurred $250 of interest expense on a $350 interest payment due on January 15.
Requirements
- Journalize the adjusting entry needed on December 31 for each of the previous items affecting Lopez Landscaping. Assume Lopez records adjusting entries only at the end of the year.
- Journalize the subsequent journal entries for adjusting entries
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