Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool, Inc.) on January 1, 2020. The annual reporting period ends December 31. The trial balance on January 1, 2021, follows (the amounts are rounded to thousands of dollars to simplify): Transactions and events during 2021 (summarized in thousands of dollars) follow: a. Borrowed $12 cash on March 1 using a short-term note. b. Purchased land on March 2 for future building site; paid cash, $9. c. Issued additional shares of common stock on April 3 for $23. d. Purchased software on July 4, $10 cash. e. Purchased supplies on account on October 5 for future use, $18. f. Paid accounts payable on November 6, $13. g. Signed a $25 service contract on November 7 to start February 1, 2022. h. Recorded revenues of $160 on December 8, including $40 on credit and $120 collected in cash. i. Recognized salaries and wages expense on December 9, $85 paid in cash. j. Collected accounts receivable on December 10, $24. Data for adjusting journal entries as of December 31: k. Unrecorded amortization for the year on software, $5. l. Supplies counted on December 31, 2021, $10. m. Depreciation for the year on the equipment, $6. n. Interest of $1 to accrue on notes payable. o. Salaries and wages earned but not yet paid or recorded, $12. p. Income tax for the year was $8. It will be paid in 2022. 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you. 2. Record journal entries for transactions (a) through (j). 3. Post the journal entries from requirement 2 to T-accounts and prepare an unadjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your answers to requirement 2. 4. Record the adjusting journal entries (k) through (p). 5. Post the adjusting entries from requirement 4 and prepare an adjusted trial balance. If you are completing this problem in Connect using the general ledger tool, this requirement will be completed for you using your previous answers.
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.
Brothers Harry and Herman Hausyerday began operations of their machine shop (H & H Tool,
Inc.) on January 1, 2020. The annual reporting period ends December 31. The
January 1, 2021, follows (the amounts are rounded to thousands of dollars to simplify):
Transactions and events during 2021 (summarized in thousands of dollars) follow:
a. Borrowed $12 cash on March 1 using a short-term note.
b. Purchased land on March 2 for future building site; paid cash, $9.
c. Issued additional shares of common stock on April 3 for $23.
d. Purchased software on July 4, $10 cash.
e. Purchased supplies on account on October 5 for future use, $18.
f. Paid accounts payable on November 6, $13.
g. Signed a $25 service contract on November 7 to start February 1, 2022.
h. Recorded revenues of $160 on December 8, including $40 on credit and $120 collected
in cash.
i. Recognized salaries and wages expense on December 9, $85 paid in cash.
j. Collected accounts receivable on December 10, $24.
Data for adjusting
k. Unrecorded amortization for the year on software, $5.
l. Supplies counted on December 31, 2021, $10.
m. Depreciation for the year on the equipment, $6.
n. Interest of $1 to accrue on notes payable.
o. Salaries and wages earned but not yet paid or recorded, $12.
p. Income tax for the year was $8. It will be paid in 2022.
1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. If you
are completing this problem in Connect using the general ledger tool, this requirement will be
completed for you.
2. Record journal entries for transactions (a) through (j).
3.
balance. If you are completing this problem in Connect using the general ledger tool, this
requirement will be completed for you using your answers to requirement 2.
4. Record the adjusting journal entries (k) through (p).
5. Post the
completing this problem in Connect using the general ledger tool, this requirement will be
completed for you using your previous answers.
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