Listed bellow are the account names and their balances after adjustments for Brian O’Brion Dance Studio Company for the monthly period at the August 31, 2021. Rent expense 1,500 O’Brion, drawing 1,100 Salary expense 3,000 Equipment 49,000 Salary payable 500 Accounts payable 4,500 Cash 15,800 O’Brion, capital 36,500 Accumulated depreciation 5,500 Service revenue 18,100 Long-term note payable 4,400 Depreciation expense 300 Utilities expense 600 Supplies 2,000 Prepaid rent 900 Unearned service revenue 5,100 Supplies expense 400 Prepare the Income statement for Brian O’Brion Dance Studio Company for given period. What conclusions can you make about the company from its Income statement? Prepare the statement of owner’s equity. Prepare classified Balance Sheet statement in the account form.
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.
Listed bellow are the account names and their balances after adjustments for Brian O’Brion Dance Studio Company for the monthly period at the August 31, 2021.
| Rent expense | 1,500 | O’Brion, drawing | 1,100 |
| Salary expense | 3,000 | Equipment | 49,000 |
| Salary payable | 500 | Accounts payable | 4,500 |
| Cash | 15,800 | O’Brion, capital | 36,500 |
| Accumulated depreciation | 5,500 | Service revenue | 18,100 |
| Long-term note payable | 4,400 | Depreciation expense | 300 |
| Utilities expense | 600 | Supplies | 2,000 |
| Prepaid rent | 900 | Unearned service revenue | 5,100 |
| Supplies expense | 400 |
- Prepare the Income statement for Brian O’Brion Dance Studio Company for given period. What conclusions can you make about the company from its Income statement?
- Prepare the statement of owner’s equity.
- Prepare classified Balance Sheet statement in the account form.
- Compute O’Brion’s
current ratio and debt ratio at August 31, 2021. One year ago, the current ratio was 1.49 and the debt ratio was 0.29. Indicate whether O’Brion’s ability to pay current and total debts has improved, deteriorated, or remained the same during the current year.
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