Trotman’s Variety Store is completing the accounting process for the current year just ended, December 31. The transactions during the year have been journalized and posted. The following data with respect to adjusting entries are available: Wages earned by employees during December, unpaid and unrecorded at December 31, amounted to $4,400. The last payroll was December 28; the next payroll will be January 6. Office supplies on hand at January 1 of the current year totaled $650. Office supplies purchased and debited to Office Supplies during the year amounted to $590. The year-end count showed $270 of supplies on hand. One-fourth of the basement space is rented to Kathy's Specialty Shop for $480 per month, payable monthly. At the end of the current year, the rent for November and December had not been collected or recorded. Collection is expected in January of the next year. The store used delivery equipment all year that cost $61,500; $12,200 was the estimated annual depreciation. On July 1 of the current year, a two-year insurance premium amounting to $3,120 was paid in cash and debited in full to Prepaid Insurance. Coverage began on July 1 of the current year. The remaining basement of the store is rented for $1,500 per month to another merchant, M. Carlos, Incorporated. Carlos sells compatible, but not competitive, merchandise. On November 1 of the current year, the store collected six months' rent in the amount of $9,000 in advance from Carlos; it was credited in full to Unearned Rent Revenue when collected. Trotman’s Variety Store operates a repair shop to meet its own needs. The shop also does repairs for M. Carlos. At the end of the current year, Carlos had not paid $810 for completed repairs. This amount has not yet been recorded as Repair Shop Revenue. Collection is expected during January of next year. Prepare the adjusting entries that should be recorded for Trotman’s Variety Store at December 31 of the current year. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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.
Trotman’s Variety Store is completing the accounting process for the current year just ended, December 31. The transactions during the year have been journalized and posted. The following data with respect to
- Wages earned by employees during December, unpaid and unrecorded at December 31, amounted to $4,400. The last payroll was December 28; the next payroll will be January 6.
- Office supplies on hand at January 1 of the current year totaled $650. Office supplies purchased and debited to Office Supplies during the year amounted to $590. The year-end count showed $270 of supplies on hand.
- One-fourth of the basement space is rented to Kathy's Specialty Shop for $480 per month, payable monthly. At the end of the current year, the rent for November and December had not been collected or recorded. Collection is expected in January of the next year.
- The store used delivery equipment all year that cost $61,500; $12,200 was the estimated annual
depreciation. - On July 1 of the current year, a two-year insurance premium amounting to $3,120 was paid in cash and debited in full to Prepaid Insurance. Coverage began on July 1 of the current year.
- The remaining basement of the store is rented for $1,500 per month to another merchant, M. Carlos, Incorporated. Carlos sells compatible, but not competitive, merchandise. On November 1 of the current year, the store collected six months' rent in the amount of $9,000 in advance from Carlos; it was credited in full to Unearned Rent Revenue when collected.
- Trotman’s Variety Store operates a repair shop to meet its own needs. The shop also does repairs for M. Carlos. At the end of the current year, Carlos had not paid $810 for completed repairs. This amount has not yet been recorded as Repair Shop Revenue. Collection is expected during January of next year.
Prepare the adjusting entries that should be recorded for Trotman’s Variety Store at December 31 of the current year.
Note: If no entry is required for a transaction/event, select "No
A journal entry is a form of accounting entry that is used to report a business transaction in a company's accounting records.
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