Mint Cleaning Inc. prepared the following unadjusted trial balance at the end of its second year of operations ending December 31. (Assume amounts are reported in thousands of dollars.)Account Titles Debit CreditCash $ 55Accounts Receivable 4Prepaid Insurance 7Equipment 114Accumulated Depreciation $ 0Accounts Payable 4Common Stock 110Retained Earnings 14Sales Revenue 122Insurance Expense 0Salaries and Wages Expense 27Supplies Expense 43Totals $ 250 $ 250Other data not yet recorded at December 31:Insurance expired during the year, $5.Depreciation expense for the year, $4.Salaries and wages payable, $7.Income tax expense, $9.By what amount would net income have been understated or overstated had the adjusting journal entries not been recorded? (Enter your answers in thousands of dollars.)Net Income ____ by ___how would I go about solving this problem
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.
Mint Cleaning Inc. prepared the following unadjusted
Account Titles Debit Credit
Cash $ 55
Accounts Receivable 4
Prepaid Insurance 7
Equipment 114
Accumulated
Accounts Payable 4
Common Stock 110
Retained Earnings 14
Sales Revenue 122
Insurance Expense 0
Salaries and Wages Expense 27
Supplies Expense 43
Totals $ 250 $ 250
Other data not yet recorded at December 31:
Insurance expired during the year, $5.
Depreciation expense for the year, $4.
Salaries and wages payable, $7.
Income tax expense, $9.
By what amount would net income have been understated or overstated had the
Net Income ____ by ___
how would I go about solving this problem
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 3 images
