Problem 2 - Prepare Adjusting Entries, Post to the Ledger, and Prepare an Adjusted Trial Balance Required: Prepare the adjusting entries using the journal below the unadjusted trial balance, and then complete the worksheet to prepare an adjusted trial balance. The following data are taken from an unadjusted trial balance at December 31, 2020 for Grant Corp. Grant Corporation Unadjusted Trial Balance as of December 31, 2020 Account Debit Credit Cash 2,200 Accounts Receivable 13,900 Supplies 780 Prepaid Rent 6,600 Land 21,700 Equipment 22,710 Accum. Deprec. - Equip. 11,640 Accounts Payable 1,940 Salaries Payable - Unearned Revenue 2,350 Common Stock 38,000 Retained Earnings 12,000 Dividends 2,900 Service Revenue 7,750 Rent Expense - Salaries Expense 2,160 Advertising Expense 730 Depreciation Expense - Supplies Expense - Total 73,680 73,680 Adjustments needed for: a. The prepaid rent is for the 6 months starting on December 1, 2020 b. Revenue earned but unbilled on December 31, $3,000 c. Supplies used for the period, $350 d. Salaries owed for the last two days of the year, $250 e. Revenue unearned at the end of the period, $1,250 f. Depreciation on the equipment for the period, $500 General Journal Date Account Debit Credit a. b. c. d. e. f. Grant Corporation Adjusted Trial Balance Worksheet - December 31, 2020 Unadjusted Trial Balance Adjusting Entries Adjusted Trial Balance Account Debit Credit Debit Credit Debit Credit Cash Accounts Receivable Supplies Prepaid Rent Land Equipment Accum. Deprec. - Equip. Accounts Payable Salaries Payable Unearned Revenue Common Stock Retained Earnings Dividends Service Revenue Rent Expense Salaries Expense Advertising Expense Depreciation Expense Supplies Expense Total
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.
| Problem 2 - Prepare |
| Required: | ||||||||||||||
| Prepare the adjusting entries using the journal below the unadjusted trial balance, and then complete the worksheet to prepare an adjusted trial balance. | ||||||||||||||
| The following data are taken from an unadjusted trial balance at December 31, 2020 for Grant Corp. |
| Grant Corporation | |||||||
| Unadjusted Trial Balance as of December 31, 2020 | |||||||
| Account | Debit | Credit | |||||
| Cash | 2,200 | ||||||
| 13,900 | |||||||
| Supplies | 780 | ||||||
| Prepaid Rent | 6,600 | ||||||
| Land | 21,700 | ||||||
| Equipment | 22,710 | ||||||
| Accum. Deprec. - Equip. | 11,640 | ||||||
| Accounts Payable | 1,940 | ||||||
| Salaries Payable | - | ||||||
| Unearned Revenue | 2,350 | ||||||
| Common Stock | 38,000 | ||||||
| 12,000 | |||||||
| Dividends | 2,900 | ||||||
| Service Revenue | 7,750 | ||||||
| Rent Expense | - | ||||||
| Salaries Expense | 2,160 | ||||||
| Advertising Expense | 730 | ||||||
| - | |||||||
| Supplies Expense | - | ||||||
| Total | 73,680 | 73,680 | |||||
| Adjustments needed for: | |||||||
| a. The prepaid rent is for the 6 months starting on December 1, 2020 | |||||||
| b. Revenue earned but unbilled on December 31, $3,000 | |||||||
| c. Supplies used for the period, $350 | |||||||
| d. Salaries owed for the last two days of the year, $250 | |||||||
| e. Revenue unearned at the end of the period, $1,250 | |||||||
| f. Depreciation on the equipment for the period, $500 | |||||||
| General Journal | |||||||
| Date | Account | Debit | Credit | ||||
| a. | |||||||
| b. | |||||||
| c. | |||||||
| d. | |||||||
| e. | |||||||
| f. | |||||||
| Grant Corporation | ||||||||
| Adjusted Trial Balance Worksheet - December 31, 2020 | ||||||||
| Unadjusted Trial Balance | Adjusting Entries | Adjusted Trial Balance | ||||||
| Account | Debit | Credit | Debit | Credit | Debit | Credit | ||
| Cash | ||||||||
| Accounts Receivable | ||||||||
| Supplies | ||||||||
| Prepaid Rent | ||||||||
| Land | ||||||||
| Equipment | ||||||||
| Accum. Deprec. - Equip. | ||||||||
| Accounts Payable | ||||||||
| Salaries Payable | ||||||||
| Unearned Revenue | ||||||||
| Common Stock | ||||||||
| Retained Earnings | ||||||||
| Dividends | ||||||||
| Service Revenue | ||||||||
| Rent Expense | ||||||||
| Salaries Expense | ||||||||
| Advertising Expense | ||||||||
| Depreciation Expense | ||||||||
| Supplies Expense | ||||||||
| Total |
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