Trelawney Technology a merchandiser for an exquisite brand of fine wines provided the following trail balance as of May 30th 2015: DR CR Cash 1,500,000 Accounts receivable 650,000 Merchandise Inventory 225,000 Supplies 120,000 Prepaid insurance 75,000 Building 8,000,000 Accumulated depreciation-building 1,200,000 Furniture and fixtures 2,200,000 Accumulated depreciation-furniture& fix. 330,000 Accounts payable 290,000 Note payable-long term 121,100 James Lowe, Capital 10,000,000 James Lowe, withdrawals 1,200,000 Sales revenue 6,200,900 Cost of goods sold 2,800,000 Salary expense 910,000 Telephone expense 90,000 Utilities expense 330,000 Interest expense 42,000 18,142,000 18,142,000 The following additional information is available at May 30th, 2015: (i) Supplies on hand at May 30th, 2015 amounted to $65,400. (ii) Insurance of $75,000 was paid on April 1st, 2015 for three (3) months to June 30th, 2015. (iii) The Building was purchased on February 1st, 2014 and is being depreciated over ten (10) years on the double – declining method of deprecation down to a residue of $90,000. (Round off answer to the nearest dollar) (iv) The furniture and fixture have an estimated useful life of six (6) years and are being depreciated on the straight-line method down to a residue of $10,000. (v) Salaries earned by employees not yet paid amounted to $135,000 at May 30th, 2015. (vi) Accrued interest expense due on the notes payable at May 30th amounted to $18,500 (vii) A physical count of inventory at May 30th, 2015, reveals $125,000 worth of inventory on hand. (viii) The ageing of the accounts receivable indicated that the estimated allowance for uncollectible accounts is $65,000. Required: Prepare the necessary adjusting journal entries on May 30th, 2015. Prepare the multi-step income statement for the year ended May 30th, 2015. Prepare the owner’s equity statement for the year ended May 30th, 2015. Prepare the balance sheet for the year ended May 30th, 2015
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.
Trelawney Technology a merchandiser for an exquisite brand of fine wines provided the following trail balance as of May 30th 2015:
|
|
DR |
CR |
|
Cash |
1,500,000 |
|
|
Accounts receivable |
650,000 |
|
|
Merchandise Inventory |
225,000 |
|
|
Supplies |
120,000 |
|
|
Prepaid insurance |
75,000 |
|
|
Building |
8,000,000 |
|
|
|
|
1,200,000 |
|
Furniture and fixtures |
2,200,000 |
|
|
Accumulated depreciation-furniture& fix. |
|
330,000 |
|
Accounts payable |
|
290,000 |
|
Note payable-long term |
|
121,100 |
|
James Lowe, Capital |
|
10,000,000 |
|
James Lowe, withdrawals |
1,200,000 |
|
|
Sales revenue |
|
6,200,900 |
|
Cost of goods sold |
2,800,000 |
|
|
Salary expense |
910,000 |
|
|
Telephone expense |
90,000 |
|
|
Utilities expense |
330,000 |
|
|
Interest expense |
42,000 |
|
|
|
18,142,000 |
18,142,000 |
The following additional information is available at May 30th, 2015:
(i) Supplies on hand at May 30th, 2015 amounted to $65,400.
(ii) Insurance of $75,000 was paid on April 1st, 2015 for three (3) months to June 30th, 2015.
(iii) The Building was purchased on February 1st, 2014 and is being
(iv) The furniture and fixture have an estimated useful life of six (6) years and are being depreciated on the straight-line method down to a residue of $10,000.
(v) Salaries earned by employees not yet paid amounted to $135,000 at May 30th, 2015.
(vi) Accrued interest expense due on the notes payable at May 30th amounted to $18,500
(vii) A physical count of inventory at May 30th, 2015, reveals $125,000 worth of inventory on hand.
(viii) The ageing of the accounts receivable indicated that the estimated allowance for uncollectible accounts is $65,000.
Required:
- Prepare the necessary
adjusting journal entries on May 30th, 2015. - Prepare the multi-step income statement for the year ended May 30th, 2015.
- Prepare the owner’s equity statement for the year ended May 30th, 2015.
- Prepare the balance sheet for the year ended May 30th, 2015
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