Stark company has the following adjusted accounts with normal balances at its December 31 year-end. Notes payable $ 11,000 Accumulated depreciation—Buildings $ 15,000 Prepaid insurance 2,500 Accounts receivable 4,000 Interest expense 500 Utilities expense 1,300 Accounts payable 1,500 Interest payable 100 Wages payable 400 Unearned revenue 800 Cash 10,000 Supplies expense 200 Wages expense 7,500 Buildings 40,000 Insurance expense 1,800 Dividends 3,000 Common stock 10,000 Depreciation expense—Buildings 2,000 Services revenue 20,000 Supplies 800 Retained earnings 14,800 prepare an income statement (1) statement of retained earnings for the year ended Decemeber 31 (2) balance sheet at dec 31 (3) the retained earnings account balance was $14,800 on December 31 of the prior year.
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.
Stark company has the following adjusted accounts with normal balances at its December 31 year-end.
| Notes payable | $ 11,000 | $ 15,000 | |
| Prepaid insurance | 2,500 | 4,000 | |
| Interest expense | 500 | Utilities expense | 1,300 |
| Accounts payable | 1,500 | Interest payable | 100 |
| Wages payable | 400 | Unearned revenue | 800 |
| Cash | 10,000 | Supplies expense | 200 |
| Wages expense | 7,500 | Buildings | 40,000 |
| Insurance expense | 1,800 | Dividends | 3,000 |
| Common stock | 10,000 | Depreciation expense—Buildings | 2,000 |
| Services revenue | 20,000 | Supplies | 800 |
| 14,800 |
prepare an income statement (1)
statement of retained earnings for the year ended Decemeber 31 (2)
the retained earnings account balance was $14,800 on December 31 of the prior year.
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