2) After completion of problem 1 above, change the account balances to their adjusted totals and produce an Adjusted Trial Balance dated December 31, 2021. A three-line heading is required. 3) Using your answer from #2 above, determine the following: a. Net Income (Loss) for the year ended December 31, 2021 b. Retained Earnings for the year ended December 31, 2021 Using the unadjusted trial balance above on page 1, along with the adjusting information below, prepare the following: 1) 7 adjusting entries (a-g) necessary for year-end adjustment 2) 5 Initial entries for the 5 deferrals 3) 2 new year entries for the 2 accruals a. A count of supplies shows $500 worth has been used up. b. $75 worth of prepaid insurance has expired c. Depreciation on furniture is $310 this year. d. Depreciation on equipment for the year is $220. e. As of today (year-end), $750 worth of Unearned Revenue has been earned. f. An unbilled invoice is discovered. The $500 invoice was for a tattoo created on December 22, 2021. g. Jordan has only one employee - his son, Allen, who works a 5-day workweek at $1,500 per week. Allen was paid last Friday, and he worked one day this week prior to the end of the year (Monday). His next pay day is Friday, which falls in January. Taunton's Tattoos Unadjusted Trial Balance December 31, 2021 Account Credit Cash Accounts Receivable Prepaid Insurance Supplies Equipment Accumulated Depreciation - Equipment Furniture Accumulated Depreciation - Furniture Salaries Payable Unearned Revenue Common Stock Dividends Service Revenue Salaries Expense Utilities Expense Depreciation Expense - Equipment Depreciation Expense - Furniture Supplies Expense Insurance Expense Debit 4,500 0 150 760 8,500 5,300 1,900 11,700 750 11,170 4,100 710 0 0 24.770 24.770 0 0 0
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.
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