Val’s Hair Emporium is a hair salon. Its unadjusted trial balance as of December 31, 2017, follows, along with information about selected accounts. Account Name Debit Credit Further Information Cash $ 22,200 As reported on December 31 bank statement. Supplies 7,500 Based on count, only $4,000 of supplies still exist. Prepaid Rent 10,800 This amount was paid November 1 for rent through the end of January. Accounts Payable $ 2,300 This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $850 of utility services through December 31 for which it has not yet been billed. Wages Payable 0 Stylists have not yet been paid $230 for their work on December 31. Income Tax Payable 0 The company has paid last year’s income taxes but not this year’s taxes. Contributed Capital 2,800 This amount was contributed to the company in prior years. Retained Earnings 2,500 This is the balance reported at the end of last year. Hair Styling Revenue 123,800 Customers pay cash when they receive services. Wages Expense 33,100 This is the cost of stylist wages through December 30. Utilities Expense 14,600 This is the cost of utilities through December 15. Rent Expense 36,000 This year’s rent was $3,600 per month. Supplies Expense 7,200 This is the cost of supplies used through November 30. Income Tax Expense 0 The company has an average tax rate of 30 percent. Totals $ 131,400 $ 131,400 Required: 1. Nothing to answer here. 2. Name the five pairs of balance sheet and income statement accounts that require adjustment. 3. Calculate the desired balances for each account listed in the unadjusted trial balance. 4. Prepare the adjusting journal entries that are required at December 31, 2017. (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.
Val’s Hair Emporium is a hair salon. Its unadjusted
| Account Name | Debit | Credit | Further Information | |||||
| Cash | $ | 22,200 | As reported on December 31 bank statement. | |||||
| Supplies | 7,500 | Based on count, only $4,000 of supplies still exist. | ||||||
| Prepaid Rent | 10,800 | This amount was paid November 1 for rent through the end of January. | ||||||
| Accounts Payable | $ | 2,300 |
This represents the total amount of bills received for supplies and utilities through December 15. Val estimates that the company has received $850 of utility services through December 31 for which it has not yet been billed. |
|||||
| Wages Payable | 0 | Stylists have not yet been paid $230 for their work on December 31. | ||||||
| Income Tax Payable | 0 | The company has paid last year’s income taxes but not this year’s taxes. | ||||||
| Contributed Capital | 2,800 | This amount was contributed to the company in prior years. | ||||||
| |
2,500 | This is the balance reported at the end of last year. | ||||||
| Hair Styling Revenue | 123,800 | Customers pay cash when they receive services. | ||||||
| Wages Expense | 33,100 | This is the cost of stylist wages through December 30. | ||||||
| Utilities Expense | 14,600 | This is the cost of utilities through December 15. | ||||||
| Rent Expense | 36,000 | This year’s rent was $3,600 per month. | ||||||
| Supplies Expense | 7,200 | This is the cost of supplies used through November 30. | ||||||
| Income Tax Expense | 0 | The company has an average tax rate of 30 percent. | ||||||
| Totals | $ | 131,400 | $ | 131,400 | ||||
Required:
1. Nothing to answer here.
2. Name the five pairs of balance sheet and income statement accounts that require adjustment.
3. Calculate the desired balances for each account listed in the unadjusted trial balance.
4. Prepare the
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