The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2019, fiscal year. The April 30, 2018, credit balance of the owner's capital account was $46,900, and the owner invested $40,000 cash in the company during the 2019 fiscal year. Unadjusted Trial Balance April 30, 2019 No. Account TItle 101 Cash 126 Supplies 128 Prepaid insurance 167 Equipment 168 Accumulated depreciation-Equipment 201 Accounts payable 203 Interest payable 208 Rent payable 210 Wages payable 213 Property taxes payable 251 Long-term notes payable 301 J. Bonn, Capital 302 J. Bonn, Withdrawals 401 Demolition fees earned Debit Credit $ 7,000 16,000 12,600 200,000 $ 14,000 6,800 30,000 86,900 12,000 187,000 612 Depreciation expense-Equipment 623 Wages expense 633 Interest expense 637 Insurance expense 640 Rent expense 652 Supplies expense 683 Property taxes expense 684 Repairs expense 690 Utilities expense Totals 41,400 3,300 13,200 9,700 4,700 4,800 $ 324,700 $324,700
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.
Required
1. Prepare and complete a 10-column work sheet for fiscal year 2019, starting with the unadjusted
balance
a. The supplies available at the end of fiscal year 2019 had a cost of $7,900.
b. The cost of expired insurance for the fiscal year is $10,600.
c. Annual
d. The April utilities expense of $800 is not included in the unadjusted trial balance because the bill
arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.
e. The company’s employees have earned $2,000 of accrued and unpaid wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.
g. Additional property taxes of $550 have been assessed for this fiscal year but have not been paid or
recorded in the accounts.
h. The $300 accrued interest for April on the long-term notes payable has not yet been paid or recorded.
2. Using information from the completed 10-column work sheet in part 1, journalize the
and the closing entries.
3. Prepare the income statement and the statement of owner’s equity for the year ended April 30 and the
classified balance sheet at April 30, 2019.
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