QS 3-19 Preparing financial statements LO P6 The adjusted trial balance for Zahurak Company follows. Adjusted Trial Balance December 31 No. Account Title Dr. Cr. 101 Cash $ 6,200 106 Accounts receivable 27,094 153 Trucks 42,500 154 Accumulated depreciation—Trucks 17,085 183 Land 30,000 201 Accounts payable 14,446 209 Salaries payable 3,305 233 Unearned fees 2,705 301 E. Happ, Capital 65,264 302 E. Happ, Withdrawals 17,916 401 Plumbing fees earned 70,000 611 Depreciation expense—Trucks 5,695 622 Salaries expense 32,760 640 Rent expense 10,640 Totals $ 172,805 $ 172,805 Required: a. Use the adjusted trial balance to prepare the December 31 year-end income statement. b. Use the adjusted trial balance to prepare the December 31 year-end statement of owner's equity. The E. Happ, Capital account balance was $65,264 on December 31 of the prior year. c. Use the adjusted trial balance to prepare the December 31 year-end balance sheet.
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.
QS 3-19 Preparing financial statements LO P6
The adjusted
| Adjusted Trial Balance | |||||||
| December 31 | |||||||
| No. | Account Title | Dr. | Cr. | ||||
| 101 | Cash | $ | 6,200 | ||||
| 106 | Accounts receivable | 27,094 | |||||
| 153 | Trucks | 42,500 | |||||
| 154 | 17,085 | ||||||
| 183 | Land | 30,000 | |||||
| 201 | Accounts payable | 14,446 | |||||
| 209 | Salaries payable | 3,305 | |||||
| 233 | Unearned fees | 2,705 | |||||
| 301 | E. Happ, Capital | 65,264 | |||||
| 302 | E. Happ, Withdrawals | 17,916 | |||||
| 401 | Plumbing fees earned | 70,000 | |||||
| 611 | Depreciation expense—Trucks | 5,695 | |||||
| 622 | Salaries expense | 32,760 | |||||
| 640 | Rent expense | 10,640 | |||||
| Totals | $ | 172,805 | $ | 172,805 | |||
Required:
a. Use the adjusted trial balance to prepare the December 31 year-end income statement.
b. Use the adjusted trial balance to prepare the December 31 year-end statement of owner's equity. The E. Happ, Capital account balance was $65,264 on December 31 of the prior year.
c. Use the adjusted trial balance to prepare the December 31 year-end balance sheet.
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