Tunstall, Inc., a small service company, keeps its records without the help of an accountant. After much effort, an outside accountant prepared the following unadjusted trial balance as of the end of the annual accounting period on December 31: Tunstall, Inc. Unadjusted Trial Balance for the Year Ended December 31 Debit Credit Cash 46,800 Accounts receivable 11,700 Supplies 550 Prepaid insurance 630 Service trucks 16,300 Accumulated depreciation 8,400 Other assets 9,860 Accounts payable 2,220 Wages payable Income taxes payable Notes payable, long-term 15,000 Common stock (4,100 shares outstanding) 1,936 Additional paid-in capital 17,424 Retained earnings 4,600 Service revenue 85,680 Wages expense 16,200 Remaining expenses (not detailed; excludes income tax) 33,220 Income tax expense Totals 135,260 135,260 Data not yet recorded at December 31 included: The supplies count on December 31 reflected $190 in remaining supplies on hand to be used in the next year. Insurance expired during the current year, $630. Depreciation expense for the current year, $4,200. Wages earned by employees not yet paid on December 31, $560. Income tax expense, $5,780.
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.
Tunstall, Inc., a small service company, keeps its records without the help of an accountant. After much effort, an outside accountant prepared the following unadjusted
| Tunstall, Inc. Unadjusted Trial Balance for the Year Ended December 31 |
|||||||
| Debit | Credit | ||||||
| Cash | 46,800 | ||||||
| 11,700 | |||||||
| Supplies | 550 | ||||||
| Prepaid insurance | 630 | ||||||
| Service trucks | 16,300 | ||||||
| 8,400 | |||||||
| Other assets | 9,860 | ||||||
| Accounts payable | 2,220 | ||||||
| Wages payable | |||||||
| Income taxes payable | |||||||
| Notes payable, long-term | 15,000 | ||||||
| Common stock (4,100 shares outstanding) | 1,936 | ||||||
| Additional paid-in capital | 17,424 | ||||||
| 4,600 | |||||||
| Service revenue | 85,680 | ||||||
| Wages expense | 16,200 | ||||||
| Remaining expenses (not detailed; excludes income tax) |
33,220 | ||||||
| Income tax expense | |||||||
| Totals | 135,260 | 135,260 | |||||
Data not yet recorded at December 31 included:
- The supplies count on December 31 reflected $190 in remaining supplies on hand to be used in the next year.
- Insurance expired during the current year, $630.
- Depreciation expense for the current year, $4,200.
- Wages earned by employees not yet paid on December 31, $560.
- Income tax expense, $5,780.
I need some help with the income statment. Thank you!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
