alance Sheet Below is the balance sheet for Labyrinth Services Co., which contains errors. Labyrinth Services Co. Balance Sheet For the Year Ended August 31, 2019 Assets Current assets: Cash $14,500 Accounts payable 24,700 Supplies 6,600 Prepaid insurance 11,700 Land 188,000 Total current assets $245,500 Property, plant, and equipment: Building $393,200 Equipment 88,900 Total property, plant, and equipment 639,200 Total assets $884,700 Liabilities Current liabilities: Accounts receivable $32,900 Accumulated depreciation—building 161,900 Accumulated depreciation—equipment 26,300 Net income 140,700 Total liabilities $361,800 Owner's Equity Wages payable $2,700 Ruben Daniel, Capital 520,200 Total owner's equity 522,900 Total liabilities and owner's equity $884,700 Required: Prepare a corrected balance sheet.
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.
alance Sheet
Below is the
| Labyrinth Services Co. | ||
| Balance Sheet | ||
| For the Year Ended August 31, 2019 | ||
| Assets | ||
| Current assets: | ||
| Cash | $14,500 | |
| Accounts payable | 24,700 | |
| Supplies | 6,600 | |
| Prepaid insurance | 11,700 | |
| Land | 188,000 | |
| Total current assets | $245,500 | |
| Property, plant, and equipment: | ||
| Building | $393,200 | |
| Equipment | 88,900 | |
| Total property, plant, and equipment | 639,200 | |
| Total assets | $884,700 | |
| Liabilities | ||
| Current liabilities: | ||
| $32,900 | ||
| Accumulated depreciation—building | 161,900 | |
| Accumulated depreciation—equipment | 26,300 | |
| Net income | 140,700 | |
| Total liabilities | $361,800 | |
| Owner's Equity | ||
| Wages payable | $2,700 | |
| Ruben Daniel, Capital | 520,200 | |
| Total owner's equity | 522,900 | |
| Total liabilities and owner's equity | $884,700 |
Required:
Prepare a corrected balance sheet.
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