The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted trial balance and the amounts of the adjustments are correct. Eva's Laundry Trial Balance May 31, 2019 Unadjusted Adjusted Debit Balances Credit Balances Debit Balances Credit Balances Cash 6,360 6,360 Accounts Receivable 15,430 18,520 Laundry Supplies 3,090 4,540 Prepaid Insurance* 4,390 1,190 Laundry Equipment 168,180 163,090 Accumulated Depreciation—Laundry Equipment 40,700 40,700 Accounts Payable 8,130 8,130 Wages Payable 1,020 Eva Baldwin, Capital 93,500 93,500 Eva Baldwin, Drawing 24,300 24,300 Laundry Revenue 161,230 161,230 Wages Expense 41,700 41,700 Rent Expense 21,690 21,690 Utilities Expense 15,710 15,710 Depreciation Expense 5,090 Laundry Supplies Expense 1,450 Insurance Expense 670 Miscellaneous Expense 2,710 2,710 303,560 303,560 307,020 304,580 *3,200 of insurance expired during the year. Identify the errors in the accountant’s adjusting entries, assuming that none of the accounts were affected by more than one adjusting entry. If an amount box does not require an entry, leave it blank. Eva's Laundry Adjusted Trial Balance May 31, 2019 Debit Balances Credit Balances Cash Accounts Receivable Laundry Supplies Prepaid Insurance Laundry Equipment Accumulated Depreciation-Laundry Equipment Accounts Payable Wages Payable Eva Baldwin, Capital Eva Baldwin, Drawing Laundry Revenue Wages Expense Rent Expense Utilities Expense Depreciation Expense Laundry Supplies Expense Insurance Expense Miscellaneous 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.
The accountant for Eva’s Laundry prepared the following unadjusted and adjusted trial balances. Assume that all balances in the unadjusted
| Eva's Laundry | ||||
| Trial Balance | ||||
| May 31, 2019 | ||||
| Unadjusted | Adjusted | |||
| Debit Balances |
Credit Balances |
Debit Balances |
Credit Balances |
|
| Cash | 6,360 | 6,360 | ||
| 15,430 | 18,520 | |||
| Laundry Supplies | 3,090 | 4,540 | ||
| Prepaid Insurance* | 4,390 | 1,190 | ||
| Laundry Equipment | 168,180 | 163,090 | ||
| 40,700 | 40,700 | |||
| Accounts Payable | 8,130 | 8,130 | ||
| Wages Payable | 1,020 | |||
| Eva Baldwin, Capital | 93,500 | 93,500 | ||
| Eva Baldwin, Drawing | 24,300 | 24,300 | ||
| Laundry Revenue | 161,230 | 161,230 | ||
| Wages Expense | 41,700 | 41,700 | ||
| Rent Expense | 21,690 | 21,690 | ||
| Utilities Expense | 15,710 | 15,710 | ||
| Depreciation Expense | 5,090 | |||
| Laundry Supplies Expense | 1,450 | |||
| Insurance Expense | 670 | |||
| Miscellaneous Expense | 2,710 | 2,710 | ||
| 303,560 | 303,560 | 307,020 | 304,580 |
*3,200 of insurance expired during the year.
Identify the errors in the accountant’s
| Eva's Laundry | ||
| Adjusted Trial Balance | ||
| May 31, 2019 | ||
| Debit Balances | Credit Balances | |
| Cash | ||
| Accounts Receivable | ||
| Laundry Supplies | ||
| Prepaid Insurance | ||
| Laundry Equipment | ||
| Accumulated Depreciation-Laundry Equipment | ||
| Accounts Payable | ||
| Wages Payable | ||
| Eva Baldwin, Capital | ||
| Eva Baldwin, Drawing | ||
| Laundry Revenue | ||
| Wages Expense | ||
| Rent Expense | ||
| Utilities Expense | ||
| Depreciation Expense | ||
| Laundry Supplies Expense | ||
| Insurance Expense | ||
| Miscellaneous Expense | ||
| Total |
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