PRACTICAL EXERCISE 3 The trial balance of the Clean Laundry on June 30, 2020 end of the current fiscal year and the data needed for year-end adjustment are presented below: CLEAN LAUNDRY Trial Balance June 30, 2020 Cash on Hand Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Unexpired Insurance Laundry Equipment Accumulated Depreciation – Laundry Equipment Notes Payable Carrie Clean, Capital Carrie Clean, Drawing Laundry Income Salaries Expense Laundry Supplies Expense Taxes and Licenses 33,000 50,000 5,000 30,000 3,600 90,000 9,000 6,000 115,000 6,000 120,000 11,000 15,000 2,500 7,000 5,000 1,900 P 255,000 Light and Water Expense Rent Expense Interest Expense Total P 255,000 Data for adjustments: 1. Laundry supplies on hand amount to P 3,000. 2. 15% of the outstanding accounts receivable are estimated to be uncollectible. 3. The estimated life of the laundry equipment is 10 years with no scrap value. 4. The unexpired insurance represents the annual premium paid on Feb. 1, 2020 5. Light and water expense unpaid on June 30 amounted to P 2,000. 6. Interested accrued on notes payable amounted to P 60. Answer for Journal Laundry Supplies Laundry Supplies Expense Dec 31 3,000 3,000 Bad Debts Expense 7,500 Allowance for Bad Debts 7,500 Laundry Equipment Expense Accumulated Depreciation-Laundry Equipment 9,000 9,000 Insurance Expense Unexpired Insurance 1,500 1,500 Light and Water Expense Light and Water Payable 2,000 Interest Expense Interest Payable 60 60 Required: 1. Prepare a 10-column worksheet 2. Prepare the financial statements.
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.
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