Required: Using the adjusted balances, prepare the closing journal entry for the year ended December 31. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
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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Mint Cleaning Incorporated prepared the following unadjusted trial balance at the end of its second year of operations
ending December 31. (Assume amounts are reported in thousands of dollars.)
Account Titles.
Cash
Accounts Receivable
Prepaid Insurance
Equipment
Accumulated Depreciation
Accounts Payable
Salaries and Wages Payable
Income Tax Payable.
Common Stock
Retained Earnings
Sales Revenue
Insurance Expense
Salaries and Wages Expense
Supplies Expense
Income Tax Expense
Totals
Other data not yet recorded at December 31:
a. Insurance expired during the year, $4.
b. Depreciation expense for the year, $3.
c. Salaries and wages payable, $6.
d. Income tax expense, $8.
View transaction list
Journal entry worksheet
A
Required:
Using the adjusted balances, prepare the closing journal entry for the year ended December 31. (If no entry is required for a
transaction/event, select "No Journal Entry Required" in the first account field. Enter your answers in thousands of dollars.)
Debit Credit
$ 39
10
7
82
Note: Enter debits before credits.
0
11
27
0
$ 176
Transaction
1
General Journal
$0
10
0
0
78
6
82
Record the closing entry for the year ended December 31.
$ 176
Debit
Credit
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