Closing Entries with Net Income Assume that the entry closing total revenues of $253,100 and total expenses of $188,900 has been made for the year ending December 31. At the end of the fiscal year, Teresa Schafer, Capital has a credit balance of $293,000 and Teresa Schafe Drawing has a balance of $24,600. a. Journalize the entry required to close the Teresa Schafer, Drawing account. If an amount box does not require an entry, leave it blank. Teresa Schafer, Capital ✓ 24,600 ✔ Teresa Schafer, Drawing Feedback How me HOW Feedback ✓ Check My Work a. The net effect of net income or net loss needs to be determined. If the company shows net income, the net balance is a credit. If the company shows a net loss, the net balance is a debit. The offsetting account to complete the closing entry for net income or net loss is the owner's capital account. Also in closing, the drawing account is closed to (or decreases) the owner's capital account. b. Determine the amount of Teresa Schafer, Capital at the end of the period. X Feedback 24,600 ✔ Check My Work Partially correct Check My Work b. Similar to the Statement of Owner's Equity, the amount of Teresa Schafer, Capital can be determined by the following equation: Ending Capital Beginning Capital Investments Net Income (Loss) - Withdrawals.
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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