For the past several years, Emily Page has operated a part-time consulting business from her home. As of June 1, 2010, Emily decided to move to rented quarters and to operate the business, which was to be known as Bottom Line Consulting, on a full-time basis. Bottom Line Consulting entered into the following transactions during June: June 1. The following assets were received from Emily Page: cash, $20,000; accounts receivable, $4,500; supplies, $2,000; and office equipment, $11,500. There were no liabilities received. 1. Paid three months’ rent on a lease rental contract, $6,000. 2. Paid the premiums on property and casualty insurance policies, $2,400. 3. Received cash from clients as an advance payment for services to be provided and recorded it as unearned fees, $2,700. 4. Purchased additional office equipment on account from Office Depot Co., $3,500. 5. Received cash from clients on account, $3,000. 6. Paid cash for a newspaper advertisement, $200. 7. Paid Office Depot Co. for part of the debt incurred on June 5, $750. 8. Recorded services provided on account for the period June 1–12, $5,100. 9. Paid part-time receptionist for two weeks’ salary, $1,100. 10. Recorded cash from cash clients for fees earned during the period June 1–16, $6,500. 11. Paid cash for supplies, $750. 12. Recorded services provided on account for the period June 13–20, $3,100. 13. Recorded cash from cash clients for fees earned for the period June 17–24, $5,150. 14. Received cash from clients on account, $6,900. 15. Paid part-time receptionist for two weeks’ salary, $1,100. 16. Paid telephone bill for June, $150. 17. Paid electricity bill for June, $400. 18. Recorded cash from cash clients for fees earned for the period June 25–30, $2,500. 19. Recorded services provided on account for the remainder of June, $1,000. 20. Emily withdrew $5,000 for personal use. Instructions 2) Post the journal to a ledger of four-column accounts. 3) Prepare an unadjusted trial balance. 4) At the end of June, the following adjustment data were assembled. Analyze and use these data to complete parts (5) and (6). a. Insurance expired during June is $200. b. Supplies on hand on June 30 are $650. c. Depreciation of office equipment for June is $250. d. Accrued receptionist salary on June 30 is $220. e. Rent expired during June is $2,000. f. Unearned fees on June 30 are $1,875. 5) Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete the spreadsheet. 6) Journalize and post the adjusting entries. 7) Prepare an adjusted trial balance. 8) Prepare an income statement, a statement of owner’s equity, and a balance sheet. 9) Prepare and post the closing entries. (Income Summary is account #33 in the chart of accounts.) Indicate closed accounts by inserting a line in both the Balance columns opposite the closing entry. 10) Prepare a post-closing trial balance.
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.
For the past several years, Emily Page has operated a part-time consulting business from her home. As of June 1,
2010, Emily decided to move to rented quarters and to operate the business, which was to be known as Bottom
Line Consulting, on a full-time basis. Bottom Line Consulting entered into the following transactions during June:
June 1. The following assets were received from Emily Page: cash, $20,000; accounts receivable, $4,500; supplies,
$2,000; and office equipment, $11,500. There were no liabilities received.
1. Paid three months’ rent on a lease rental contract, $6,000.
2. Paid the premiums on property and casualty insurance policies, $2,400.
3. Received cash from clients as an advance payment for services to be provided and recorded it as
unearned fees, $2,700.
4. Purchased additional office equipment on account from Office Depot Co., $3,500.
5. Received cash from clients on account, $3,000.
6. Paid cash for a newspaper advertisement, $200.
7. Paid Office Depot Co. for part of the debt incurred on June 5, $750.
8. Recorded services provided on account for the period June 1–12, $5,100.
9. Paid part-time receptionist for two weeks’ salary, $1,100.
10. Recorded cash from cash clients for fees earned during the period June 1–16, $6,500.
11. Paid cash for supplies, $750.
12. Recorded services provided on account for the period June 13–20, $3,100.
13. Recorded cash from cash clients for fees earned for the period June 17–24, $5,150.
14. Received cash from clients on account, $6,900.
15. Paid part-time receptionist for two weeks’ salary, $1,100.
16. Paid telephone bill for June, $150.
17. Paid electricity bill for June, $400.
18. Recorded cash from cash clients for fees earned for the period June 25–30, $2,500.
19. Recorded services provided on account for the remainder of June, $1,000.
20. Emily withdrew $5,000 for personal use.
Instructions
2) Post the journal to a ledger of four-column accounts.
3) Prepare an unadjusted
4) At the end of June, the following adjustment data were assembled. Analyze and use these data to
complete parts (5) and (6).
a. Insurance expired during June is $200.
b. Supplies on hand on June 30 are $650.
c.
d. Accrued receptionist salary on June 30 is $220.
e. Rent expired during June is $2,000.
f. Unearned fees on June 30 are $1,875.
5) Optional: Enter the unadjusted trial balance on an end-of-period spreadsheet (work sheet) and complete
the spreadsheet.
6) Journalize and post the
7) Prepare an adjusted trial balance.
8) Prepare an income statement, a statement of owner’s equity, and a balance sheet.
9) Prepare and
closed accounts by inserting a line in both the Balance columns opposite the closing entry.
10) Prepare a post-closing trial balance.
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