The following unadjusted trial balance was extracted from the books of Malasadas Trading Company at December 31, 2016 the end of the company's fiscal year. The company is owned by Donna Malasadas who trades in the business of buying and selling male and female baths gel. Malasadas Trading Company Trial Balance as at December 31, 2016 A/C Name DR $ CR $ Cash 250,000 340,000 Accounts Receivable Allowance for Bad Debts 25,000 Merchandise Inventory Store Supplies Prepaid Insurance Office Furniture 210,000 120,000 156,000 1,200,000 Accumulated Depreciation -Office Furniture Computer Equipment Accumulated Depreciation-Computer Equipment Accounts Payable Wages Payable Interest Payable Notes Payable, Long Term Unearned Sales Revenue 360,000 600,000 345,000 210,000 265,000 1,200,000 Donna Malasadas, Capital Donna Malasadas, Withdrawal 190,000 Sales Revenue Earned Sales Discount 1,755,200 15,000 27,000 490,000 215,000 Sales Return and Allowances Cost of Goods Sold Wages Expense Insurance Expense Depreciation Expense-Office Furniture Depreciation Expense-Computer Equipment Store Supplies Expense Utilities Expense Bad Debt Expense Rent Expense Interest Expense 119,000 205,000 23,200 4,160,200 Total 4,160,200 The following additional information was made available at December 31, 2016 a) Store supplies on hand at December 31, 2016 amounted to $42,000. b) Insurance of $156,000 was paid on June 1, 2016 for ten (10) months. c) The office furniture has an estimated life of ten (10) years and is being depreciated on the straight-line method of depreciation, down to a residual value of $0. d) The computer equipment was acquired on April 1, 2016 and is being depreciated over five (5) years on the double-declining method of deprecation, down to a residue of $54,432. ACCTIGO2 Page 5 e) Wages earned by the company's employees and not paid at December 31, 2016 amounted to $33,500. f) Accrued interest expense amounted to $2,850 at December 31, 2016. g) A physical count of inventory at December 31, 2016, reveals $280,300 worth of inventory on hand. h) At December 31, 2016, $195,000 of the previously unearned sales revenue had been earned. i) The aging of the accounts receivable schedule at December 31, 2016 indicated that the estimated uncollectible on accounts receivable is $34,000. Other data: j) $110,000 of the notes payable is due for payment on April 31, 2017
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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