The following unadjusted trial balance is for Ace Construction Company at its June 30 current fiscal year-end. The credit balance of the Retained Earnings account was $78,660 on June 30 of the prior year. ACE CONSTRUCTION COMPANY Unadjusted Trial Balance June 30 Number Account Title Debit Credit 101 Cash $ 18,500 126 Supplies 9,900 128 Prepaid insurance 7,200 167 Equipment 132,000 168 Accumulated depreciation—Equipment $ 26,250 201 Accounts payable 6,800 203 Interest payable 0 208 Rent payable 0 210 Wages payable 0 213 Property taxes payable 0 251 Long-term notes payable 25,000 307 Common stock 10,000 318 Retained earnings 78,660 319 Dividends 33,000 403 Construction revenue 132,100 612 Depreciation expense—Equipment 0 623 Wages expense 46,860 633 Interest expense 2,750 637 Insurance expense 0 640 Rent expense 12,000 652 Supplies expense 0 683 Property taxes expense 7,800 684 Repairs expense 2,910 690 Utilities expense 5,890 Totals $ 278,810 $ 278,810 Adjustments: Supplies available at the end of the current fiscal year total $3,300. Cost of expired insurance for the current fiscal year is $3,800. Annual depreciation on equipment is $8,400. June utilities expense of $650 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $650 amount owed must be recorded. Employees have earned $1,800 of accrued and unpaid wages at fiscal year-end. Rent expense incurred and not yet paid or recorded at fiscal year-end is $500. Additional property taxes of $1,000 have been assessed for this fiscal year but have not been paid or recorded at fiscal year-end. $250 accrued interest for June has not yet been paid or recorded. Required: 1. Prepare a 10-column work sheet for the current fiscal year, starting with the unadjusted trial balance and including adjustments using the above additional information. 2a. Prepare the adjusting entries (all dated June 30). 2b. Prepare the closing entries (all dated June 30).
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 following unadjusted
| ACE CONSTRUCTION COMPANY | |||
| Unadjusted Trial Balance | |||
| June 30 | |||
| Number | Account Title | Debit | Credit |
|---|---|---|---|
| 101 | Cash | $ 18,500 | |
| 126 | Supplies | 9,900 | |
| 128 | Prepaid insurance | 7,200 | |
| 167 | Equipment | 132,000 | |
| 168 | $ 26,250 | ||
| 201 | Accounts payable | 6,800 | |
| 203 | Interest payable | 0 | |
| 208 | Rent payable | 0 | |
| 210 | Wages payable | 0 | |
| 213 | Property taxes payable | 0 | |
| 251 | Long-term notes payable | 25,000 | |
| 307 | Common stock | 10,000 | |
| 318 | Retained earnings | 78,660 | |
| 319 | Dividends | 33,000 | |
| 403 | Construction revenue | 132,100 | |
| 612 | Depreciation expense—Equipment | 0 | |
| 623 | Wages expense | 46,860 | |
| 633 | Interest expense | 2,750 | |
| 637 | Insurance expense | 0 | |
| 640 | Rent expense | 12,000 | |
| 652 | Supplies expense | 0 | |
| 683 | Property taxes expense | 7,800 | |
| 684 | Repairs expense | 2,910 | |
| 690 | Utilities expense | 5,890 | |
| Totals | $ 278,810 | $ 278,810 |
Adjustments:
- Supplies available at the end of the current fiscal year total $3,300.
- Cost of expired insurance for the current fiscal year is $3,800.
- Annual depreciation on equipment is $8,400.
- June utilities expense of $650 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $650 amount owed must be recorded.
- Employees have earned $1,800 of accrued and unpaid wages at fiscal year-end.
- Rent expense incurred and not yet paid or recorded at fiscal year-end is $500.
- Additional property taxes of $1,000 have been assessed for this fiscal year but have not been paid or recorded at fiscal year-end.
- $250 accrued interest for June has not yet been paid or recorded.
Required:
1. Prepare a 10-column work sheet for the current fiscal year, starting with the unadjusted trial balance and including adjustments using the above additional information.
2a. Prepare the
2b. Prepare the closing entries (all dated June 30).
3a. Prepare the income statement for the year ended June 30.
3b. Prepare the statement of retained earnings for the year ended June 30.
3c. Prepare the classified balance sheet at June 30.
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