Wickers Restoration Services had the following transactions on May. 1. Received $48,000 from sale of common stock. 2. Paid rent on office for the month, $880. 3. Purchased supplies on account, $1,750. 4. Earned fees, receiving cash, $12,600. 5. Paid creditor on account, $1,000. 6. Paid automobile expenses for month, $375, and miscellaneous expenses, $250. 7. Paid office salaries for the month, $3,900. 8. Earned fees which the customer will pay next month, $2,400. 9. Determined that the cost of supplies used was $280. 10. Paid dividends, $2,400. CHART OF ACCOUNTSWickers Restoration ServicesGeneral Ledger ASSETS 11 Cash 12 Accounts Receivable 13 Supplies 14 Prepaid Insurance 16 Office Equipment LIABILITIES 21 Accounts Payable 22 Unearned Revenue 23 Notes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends REVENUE 41 Fees Earned EXPENSES 51 Rent Expense 52 Wages Expense 53 Automobile Expense 54 Supplies Expense 55 Miscellaneous Expense c. Prepare an unadjusted trial balance as of May 31.
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.
| 1. | Received $48,000 from sale of common stock. |
| 2. | Paid rent on office for the month, $880. |
| 3. | Purchased supplies on account, $1,750. |
| 4. | Earned fees, receiving cash, $12,600. |
| 5. | Paid creditor on account, $1,000. |
| 6. | Paid automobile expenses for month, $375, and miscellaneous expenses, $250. |
| 7. | Paid office salaries for the month, $3,900. |
| 8. | Earned fees which the customer will pay next month, $2,400. |
| 9. | Determined that the cost of supplies used was $280. |
| 10. | Paid dividends, $2,400. |
CHART OF ACCOUNTSWickers Restoration ServicesGeneral Ledger
| ASSETS | |
| 11 | Cash |
| 12 | |
| 13 | Supplies |
| 14 | Prepaid Insurance |
| 16 | Office Equipment |
| LIABILITIES | |
| 21 | Accounts Payable |
| 22 | Unearned Revenue |
| 23 | Notes Payable |
| EQUITY | |
| 31 | Common Stock |
| 32 | |
| 33 | Dividends |
| REVENUE | |
| 41 | Fees Earned |
| EXPENSES | |
| 51 | Rent Expense |
| 52 | Wages Expense |
| 53 | Automobile Expense |
| 54 | Supplies Expense |
| 55 | Miscellaneous Expense |
| c. | Prepare an unadjusted |
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