Required information Skip to question [The following information applies to the questions displayed below.] Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Incorporated) on January 1, 2020. The annual reporting period ends December 31. The trial balance on January 1, 2021, follows (amounts are rounded to thousands of dollars to simplify). Account Titles Debit Credit Cash $ 6 Accounts Receivable 3 Supplies 2 Equipment 5 Accumulated Depreciation $ 0 Software 10 Accumulated Amortization 4 Accounts Payable 6 Notes Payable (short-term) 0 Salaries and Wages Payable 0 Interest Payable 0 Income Tax Payable 0 Deferred Revenue 0 Common Stock 14 Retained Earnings 2 Service Revenue 0 Supplies Expense 0 Depreciation Expense 0 Salaries and Wages Expense 0 Amortization Expense 0 Interest Expense 0 Income Tax Expense 0 Totals $ 26 $ 26 Transactions during 2021 (summarized in thousands of dollars) follow: Borrowed $16 cash on July 1, 2021, signing a six-month note payable. Purchased equipment for $23 cash on July 2. Issued additional shares of common stock on July 3 for $5. Purchased additional equipment on August 4, $3 cash. Received supplies on account on supplies on September 5 for future use, $10. On December 6, recorded revenues in the amount of $60, including $9 on credit and $51 received in cash. Paid salaries and wages expenses on December 7, $24. Collected accounts receivable on December 8, $8. Paid accounts payable on December 9, $11. Received a $4 deposit on December 10 for work to start January 15, 2022. Data for adjusting journal entries on December 31: Amortization for 2021, $4. Supplies of $4 were counted on December 31, 2021. Depreciation for 2021, $2. Accrued interest on notes payable of $5. Salaries and wages earned but not yet paid, $3. Income tax for 2021 was $4 and will be paid in 2022. Required: T accounts. Enter beginning balances and post journal entries from Part 2, the adjusting journal entries from Part 4, and the closing entry from Part 7. (Enter your answers in thousands of dollars.) LAZY SOFA FURNITURE, INCORPORATED Post-Closing Trial Balance (in thousands) Account Titles Debit Credit Cash Accounts Receivable Supplies Equipment Accumulated Depreciation Software Accumulated Amortization Accounts Payable Notes Payable (short–term) Salaries and Wages Payable Interest Payable Income Tax Payable Deferred Revenue Common Stock Retained Earnings Service Revenue Salaries and Wages Expenses Supplies Expenses Depreciation Expense Amortization Expense Interest Expense Income Tax Expense Totals $0 $0 Required: 9-a. How much net income did Lazy Sofa Furniture, Incorporated, generate during 2021? 9-b. Is the company financed primarily by liabilities or stockholders’ equity? How much net income did Lazy Sofa Furniture, Incorporated, generate during 2021? (Enter your answer in thousands of dollars.) Net Income Req 9A Req 9B Is the company financed primarily by liabilities or stockholders’ equity? Liabilitiescheckbox unchecked1 of 2 Stockholders' Equitycheckbox unchecked2 of 2
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.
Required information
Skip to question[The following information applies to the questions displayed below.]
Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Incorporated) on January 1, 2020. The annual reporting period ends December 31. The
| Account Titles | Debit | Credit |
|---|---|---|
| Cash | $ 6 | |
| Accounts Receivable | 3 | |
| Supplies | 2 | |
| Equipment | 5 | |
| Accumulated Depreciation | $ 0 | |
| Software | 10 | |
| Accumulated Amortization | 4 | |
| Accounts Payable | 6 | |
| Notes Payable (short-term) | 0 | |
| Salaries and Wages Payable | 0 | |
| Interest Payable | 0 | |
| Income Tax Payable | 0 | |
| Deferred Revenue | 0 | |
| Common Stock | 14 | |
| Retained Earnings | 2 | |
| Service Revenue | 0 | |
| Supplies Expense | 0 | |
| Depreciation Expense | 0 | |
| Salaries and Wages Expense | 0 | |
| Amortization Expense | 0 | |
| Interest Expense | 0 | |
| Income Tax Expense | 0 | |
| Totals | $ 26 | $ 26 |
Transactions during 2021 (summarized in thousands of dollars) follow:
- Borrowed $16 cash on July 1, 2021, signing a six-month note payable.
- Purchased equipment for $23 cash on July 2.
- Issued additional shares of common stock on July 3 for $5.
- Purchased additional equipment on August 4, $3 cash.
- Received supplies on account on supplies on September 5 for future use, $10.
- On December 6, recorded revenues in the amount of $60, including $9 on credit and $51 received in cash.
- Paid salaries and wages expenses on December 7, $24.
- Collected accounts receivable on December 8, $8.
- Paid accounts payable on December 9, $11.
- Received a $4 deposit on December 10 for work to start January 15, 2022.
Data for
- Amortization for 2021, $4.
- Supplies of $4 were counted on December 31, 2021.
- Depreciation for 2021, $2.
- Accrued interest on notes payable of $5.
- Salaries and wages earned but not yet paid, $3.
- Income tax for 2021 was $4 and will be paid in 2022.
Required:
-
T accounts. Enter beginning balances and
post journal entries from Part 2, the adjusting journal entries from Part 4, and the closing entry from Part 7. (Enter your answers in thousands of dollars.)
|
Required:
9-a. How much net income did Lazy Sofa Furniture, Incorporated, generate during 2021?
9-b. Is the company financed primarily by liabilities or
How much net income did Lazy Sofa Furniture, Incorporated, generate during 2021? (Enter your answer in thousands of dollars.)
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|
|
- Req 9A
- Req 9B
Is the company financed primarily by liabilities or stockholders’ equity?
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