Johnson's Boat Yard, Incorporated, repairs, stores, and cleans boats for customers. It is completing the accounting process for the year just ended on November 30. The transactions for the past year have been journalized and posted. The following data with respect to adjusting entries at year-end are available: a. Johnson's winterized (cleaned and covered) three boats for customers at the end of November but did not record the service for $2,800. b. On October 1, Johnson's paid $1,800 to the local newspaper for an advertisement to run every Thursday for 12 weeks. All ads have been run except for three Thursdays in December to complete the 12-week contract. c. Johnson's borrowed $300,000 at a(n) 9 percent annual interest rate on April 1 of the current year to expand its boat storage facility. The loan requires Johnson's to pay the interest quarterly until the note is repaid in three years. Johnson's paid quarterly interest on July 1 and October 1. d. The Sanjeev family paid Johnson's $4,200 on November 1 to store its sailboat for the winter until May 1 of the next fiscal year. Johnson's credited the full amount to Unearned Storage Revenue on November 1. e. Johnson's used boat-lifting equipment that cost $230,000; $23,000 was the estimated depreciation for the current year. f. Boat repair supplies on hand at the beginning of the current year totaled $18,000. Repair supplies purchased and debited to Supplies during the year amounted to $47,200. The year-end count showed $12,200 of the supplies on hand. g. Wages of $4,100 earned by employees during November were unpaid and unrecorded at November 30. The next payroll date will be December 5 of the next fiscal year. Required:
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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