Use the adjusted trial balance and prepare a properly formatted multi-step income statement Adjusted trial balance 30- APR Debit Credit Cash 68,000 accounts receivable 12,000 Prepaid insurance 850 Prepaid Advertising 13,250 Office Supplies 1,475 Merchandise inventory 27,850 Equipment 250,000 Accumulated Depreciation - Equipment 100,000 Music Copyrights 60,000 Accounts Payable 10,300 Salaries Payable 63,018 notes payable 7,500 long-term notes payable 92,500 common stock 25,000 retained earnings 173,862 dividends 30,000 sales 265,065 sales discount 25,702 Sales returns and allowances 4,370 cost of goods sold 124,209 insurance expense (on office) 3,000 Advertising expense 1,900 office salaries expense 23,000 Office supplies expense 13,319 Office rent 24,000 Depreciation expense - office building 5,000 royalties (an expense) 26,000 travel expenses (sales related) 13,200 utilities expense 7,230 Interest expense 2,890 Totals $737,245 $737,245
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.
Use the adjusted
| Adjusted trial balance | ||
| 30- APR | ||
| Debit | Credit | |
| Cash | 68,000 | |
| accounts receivable | 12,000 | |
| Prepaid insurance | 850 | |
| Prepaid Advertising | 13,250 | |
| Office Supplies | 1,475 | |
| Merchandise inventory | 27,850 | |
| Equipment | 250,000 | |
| 100,000 | ||
| Music Copyrights | 60,000 | |
| Accounts Payable | 10,300 | |
| Salaries Payable | 63,018 | |
| notes payable | 7,500 | |
| long-term notes payable | 92,500 | |
| common stock | 25,000 | |
| 173,862 | ||
| dividends | 30,000 | |
| sales | 265,065 | |
| sales discount | 25,702 | |
| Sales returns and allowances | 4,370 | |
| cost of goods sold | 124,209 | |
| insurance expense (on office) | 3,000 | |
| Advertising expense | 1,900 | |
| office salaries expense | 23,000 | |
| Office supplies expense | 13,319 | |
| Office rent | 24,000 | |
| Depreciation expense - office building | 5,000 | |
| royalties (an expense) | 26,000 | |
| travel expenses (sales related) | 13,200 | |
| utilities expense | 7,230 | |
| Interest expense | 2,890 | |
| Totals | $737,245 | $737,245 |
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