On April 1, 2021, Betty Trout created a new self-storage company called Betty Storage Company. The following events occurred during the company's first month: April 1 Betty invested $75,000 cash, land and buildings worth $300,000 and $225,000 respectively. 2 Rented equipment by paying $4,800 for the first month. 5 Purchased $5,200 of office supplies for cash. 10 Paid $10,800 for the premium on a one-year insurance policy effective today. 14 Paid an employee $2,000 for two weeks' salary. 24 Collected $22,500 of storage revenue from customers 27 Collected $2,400 on a rental agreement for storage from May 1, 2021 to April 30, 2022 28 Paid an employee $2,000 for two weeks' salary. 29 Paid the month's $600 phone bill 30 Repaired a leak in the roof of the buidling for $2,000 on account 31 Betty withdrew $3,500 cash from the company for personal use. The following is the company's chart of accounts: 101 Cash 301 Betty Trout, Capital 106 Accounts Receivable 302 Betty Trout, Drawings 124 Office Supplies 401 Storage Revenue 128 Prepaid Insurance 606 Depreciation Expense, Buildings 170 Land 622 Salaries Expense 173 Buildings 637 Insurance Expense 174 Accumulated Depreciation, Buildings 640 Equipment Rental Expense 201 Accounts Payable 650 Office Supplies Expense 205 Unearned Revenue 684 Repairs Expense 209 Salaries Payable 688 Telephone Expense 901 Income Summary Required: 1 Set up T accounts for the chart of accounts. 2 Prepare journal entries in proper format to record the transactions for April and post them to the T accounts. 3 Prepare an unadjusted trial balance. Additional information: - A count of the office supplies has determined there is $2,700 worth of supplies on hand on April 30. - Depreciation on the building is estimated at $12,000 per year. - The employee has earned $600 of unpaid and unrecorded salary. - The company has earned $1,500 of storage revenue that has not yet been billed. 4 Prepare any adjusting journal entries required for month end in proper format and post them to the T accounts. 5 Prepare an adjusted trial balance. 5 Complete an income statement, a statement of changes in equity and a classified balance sheet. 7 Prepare closing journal entries in proper format and post them to the T accounts. 8 Prepare a post-closing trial balance. 9 Explain why you have to do the income statement first, then the statement of changes in equity and then the balance sheet. 10 Explain why closing journal entries are needed. Round all numbers to the nearest dollar!
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.
On April 1, 2021, Betty Trout created a new self-storage company called Betty Storage Company. The following events
occurred during the company's first month:
April
1
Betty invested $75,000 cash, land and buildings worth $300,000 and $225,000 respectively.
2
Rented equipment by paying $4,800 for the first month.
5
Purchased $5,200 of office supplies for cash.
10
Paid $10,800 for the premium on a one-year insurance policy effective today.
14
Paid an employee $2,000 for two weeks' salary.
24
Collected $22,500 of storage revenue from customers
27
Collected $2,400 on a rental agreement for storage from May 1, 2021 to April 30, 2022
28
Paid an employee $2,000 for two weeks' salary.
29
Paid the month's $600 phone bill
30
Repaired a leak in the roof of the buidling for $2,000 on account
31
Betty withdrew $3,500 cash from the company for personal use.
The following is the company's chart of accounts:
101
Cash
301
Betty Trout, Capital
106
Accounts Receivable
302
Betty Trout, Drawings
124
Office Supplies
401
Storage Revenue
128
Prepaid Insurance
606
Depreciation Expense, Buildings
170
Land
622
Salaries Expense
173
Buildings
637
Insurance Expense
174
Accumulated Depreciation, Buildings
640
Equipment Rental Expense
201
Accounts Payable
650
Office Supplies Expense
205
Unearned Revenue
684
Repairs Expense
209
Salaries Payable
688
Telephone Expense
901
Income Summary
Required:
1 Set up T accounts for the chart of accounts.
2 Prepare
3 Prepare an unadjusted
Additional information:
- A count of the office supplies has determined there is $2,700 worth of supplies on hand on April 30.
- Depreciation on the building is estimated at $12,000 per year.
- The employee has earned $600 of unpaid and unrecorded salary.
- The company has earned $1,500 of storage revenue that has not yet been billed.
4 Prepare any
5 Prepare an adjusted trial balance.
5 Complete an income statement, a statement of changes in equity and a classified balance sheet.
7 Prepare closing journal entries in proper format and post them to the T accounts.
8 Prepare a post-closing trial balance.
9 Explain why you have to do the income statement first, then the statement of changes in equity and then
the balance sheet.
10 Explain why closing journal entries are needed.
Round all numbers to the nearest dollar!
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