United Rug Company is a small rug retailer owned and operated by Pat Kirwan. After the accounts have been adjusted on December 31, the following selected account balances were taken from the ledger: Advertising Expense $ 33,940 Depreciation Expense 14,560 Freight In 20,410 Merchandise Inventory, January 1 371,500 Merchandise Inventory, December 31 462,050 Miscellaneous Expense 9,000 Purchases 1,764,000 Purchases Discounts 39,590 Purchases Returns and Allowances 45,080 Pat Kirwan, Drawing 66,960 Salaries Expense 370,350 Sales 2,216,000 The estimated cost of merchandise returns from December sales is $23,330. Required: Journalize the closing entries on December 31. Refer to the Chart of Accounts for exact wording of account titles.
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.
| Advertising Expense | $ 33,940 |
| 14,560 | |
| Freight In | 20,410 |
| Merchandise Inventory, January 1 | 371,500 |
| Merchandise Inventory, December 31 | 462,050 |
| Miscellaneous Expense | 9,000 |
| Purchases | 1,764,000 |
| Purchases Discounts | 39,590 |
| Purchases Returns and Allowances | 45,080 |
| Pat Kirwan, Drawing | 66,960 |
| Salaries Expense | 370,350 |
| Sales | 2,216,000 |
| Journalize the closing entries on December 31. Refer to the Chart of Accounts for exact wording of account titles. |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
