Purrfect Pet provides pet grooming and boarding services for domestic cats. The company has been in existence for 12 years. At December 31, 2016, Purrfect Pet’s adjusted trial balance is as follows: Purrfect Pet Adjusted Trial Balance December 31, 2016 Debit Credit Cash $ 89,600 Accounts receivable 64,000 Prepaid insurance 10,400 Equipment 720,000 Accumulation depreciation $ 168,000 Accounts payable 18,400 Common stock 325,600 Retained earnings 138,000 Service revenue 840,000 Miscellaneous revenue 16,400 Salaries expense 456,000 Rent expense 65,600 Insurance expense 14,400 Depreciation expense 33,600 Income tax expense 102,400 Income tax payable 49,600 $1,556,000 $ 1,556,000 Prepare an income statement. Prepare closing entries in journal entry form. After Purrfect Pet’s closing entries are posted, what is the balance in the Retained Earnings account
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.
Purrfect Pet provides pet grooming and boarding services for domestic cats. The company has been in existence for 12 years. At December 31, 2016, Purrfect Pet’s adjusted
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Purrfect Pet
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Adjusted Trial Balance
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December 31, 2016
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Debit
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Credit
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Cash
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$ 89,600
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Accounts receivable
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64,000
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Prepaid insurance
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10,400
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Equipment
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720,000
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$ 168,000
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Accounts payable
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18,400
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Common stock
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325,600
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138,000
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Service revenue
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840,000
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Miscellaneous revenue
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16,400
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Salaries expense
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456,000
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Rent expense
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65,600
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Insurance expense
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14,400
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Depreciation expense
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33,600
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Income tax expense
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102,400
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Income tax payable
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49,600
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$1,556,000
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$ 1,556,000
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Prepare an income statement.
Prepare closing entries in
After Purrfect Pet’s closing entries are posted, what is the balance in the Retained Earnings account
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