Prepare a Statement of Retained Earnings, at December 31, 2018, for Boomer-Rang Clothing Corporation. Trial Balance December 31, 2018 Debits Credits Cash $ 22,500 Accounts Receivable, net 17,350 Inventory, December 31 70,350 Prepaid Insurance 5,200 Prepaid Rent 20,000 Prepaid Advertising 2,500 Equipment 60,000 Accumulated Depreciation- Eqpuipment $ 22,500 Accounts Payable 17,000 Notes Payable 25,000 Salaries Payable 5,400 Payroll Tax Payable 2,130 Interest Payable 250 Common Stock 10,000 Retained Earnings 100,525 Dividends 15,500 Sales Revenue 496,625 Cost of Goods Sold 207,400 Bad Debt Expense 4,900 Rent Expense 20,000 Interest Expense 2,000 Legal Fees Expense 450 Insurance Expense 5,200 Property Tax Expense 1,250 Postage Expense 224 Salaries Expense (admin) 59,850 Advertising Expense 26,700 Utilities Expense 22,500 Payroll Tax Expense (operations) 11,445 Income Tax Expense 8,133
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.
Prepare a Statement of
| December 31, 2018 | |||||
| Debits | Credits | ||||
| Cash | $ 22,500 | ||||
| 17,350 | |||||
| Inventory, December 31 | 70,350 | ||||
| Prepaid Insurance | 5,200 | ||||
| Prepaid Rent | 20,000 | ||||
| Prepaid Advertising | 2,500 | ||||
| Equipment | 60,000 | ||||
| Accumulated |
$ 22,500 | ||||
| Accounts Payable | 17,000 | ||||
| Notes Payable | 25,000 | ||||
| Salaries Payable | 5,400 | ||||
| Payroll Tax Payable | 2,130 | ||||
| Interest Payable | 250 | ||||
| Common Stock | 10,000 | ||||
| Retained Earnings | 100,525 | ||||
| Dividends | 15,500 | ||||
| Sales Revenue | 496,625 | ||||
| Cost of Goods Sold | 207,400 | ||||
| 4,900 | |||||
| Rent Expense | 20,000 | ||||
| Interest Expense | 2,000 | ||||
| Legal Fees Expense | 450 | ||||
| Insurance Expense | 5,200 | ||||
| Property Tax Expense | 1,250 | ||||
| Postage Expense | 224 | ||||
| Salaries Expense (admin) | 59,850 | ||||
| Advertising Expense | 26,700 | ||||
| Utilities Expense | 22,500 | ||||
| Payroll Tax Expense (operations) | 11,445 | ||||
| Income Tax Expense | 8,133 | ||||
| Payroll Tax Expense (admin) | 8,978 | ||||
| Salaries Expense (operations) | 76,300 | ||||
| Depreciation Expense | 6,500 | ||||
| Supplies Expense | 4,200 | ||||
| Total | $ 679,430 | $ 679,430 |
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