Please explain how to complete the balance sheet and income statement given the following transactions. Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions: During the year, the company purchased office supplies that cost $3,000. At the end of the year, office supplies of $800 remained on hand. On January 1 of the current year, the company purchased a special machine for cash at a cost of $25,000. The machine’s cost is estimated to depreciate at $2,500 per year. On July 1, the company paid cash of $1,000 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year. Required: Complete the following schedule with the amounts that should be reported for the current year: Selected Balance Sheet Accounts at December 31 Amount tobe Reported Assets Equipment $800 Accumulated depreciation 25,000 Net book value of equipment (24,200) Office supplies 800 Prepaid insurance (1,000) Selected Income Statement Accounts for the Year Ended December 31 Amount tobe Reported Expenses Depreciation expense $2,500 Office supplies expense 2,200 Insurance expense 500
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.
Please explain how to complete the balance sheet and income statement given the following transactions.
Gordon Company started operations on January 1 of the current year. It is now December 31, the end of the current annual accounting period. The part-time bookkeeper needs your help to analyze the following three transactions:
- During the year, the company purchased office supplies that cost $3,000. At the end of the year, office supplies of $800 remained on hand.
- On January 1 of the current year, the company purchased a special machine for cash at a cost of $25,000. The machine’s cost is estimated to
depreciate at $2,500 per year. - On July 1, the company paid cash of $1,000 for a two-year premium on an insurance policy on the machine; coverage began on July 1 of the current year.
Required:
Complete the following schedule with the amounts that should be reported for the current year:
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