Natalie had a very busy December. At the end of the month, after journalizing and posting the December transactions and adjusting entries, Natalie prepared the following adjusted trial balance. Cookie Creations Adjusted Trial Balance December 31, 2022 Debit Credit Cash $1,180 Accounts Receivable 875 Supplies 350 Prepaid Insurance 1,210 Equipment 1,200 Accumulated Depreciation-Equipment $ 40 Accounts Payable 75 Salaries and Wages Payable 56 Unearned Service Revenue 300 Notes Payable 2,000 Interest Payable 15 Common Stock 800 Dividends 500 Service Revenue 4,515 Salaries and Wages Expense 1,006 Utilities Expense 125 Advertising Expense 165 Supplies Expense 1,025 Depreciation Expense 40 Insurance Expense 110 Interest Expense 15 $7,801 $7,801 Instructions Using the information in the adjusted trial balance, do the following. (a) Prepare an income statement and a retained earnings statement for the 2 months ended December 31, 2022, and a classified balance sheet at December 31, 2022. The note payable has a stated interest rate of 6%, and the principal and interest are due on November 16, 2024. (b) Natalie has decided that her year-end will be December 31, 2022. Prepare closing entries as of December 31, 2022. (c) Prepare a post-closing trial balance.
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.
Natalie had a very busy December. At the end of the month, after journalizing and
Cookie Creations
Adjusted Trial Balance
December 31, 2022
Debit Credit
Cash $1,180
Accounts Receivable 875
Supplies 350
Prepaid Insurance 1,210
Equipment 1,200
Accounts Payable 75
Salaries and Wages Payable 56
Unearned Service Revenue 300
Notes Payable 2,000
Interest Payable 15
Common Stock 800
Dividends 500
Service Revenue 4,515
Salaries and Wages Expense 1,006
Utilities Expense 125
Advertising Expense 165
Supplies Expense 1,025
Depreciation Expense 40
Insurance Expense 110
Interest Expense 15
$7,801 $7,801
Instructions
Using the information in the adjusted trial balance, do the following.
(a) Prepare an income statement and a
(b) Natalie has decided that her year-end will be December 31, 2022. Prepare closing entries as of December 31, 2022.
(c) Prepare a post-closing trial balance.
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