E4-2 (Algo) Identifying Adjustments and Preparing Financial Statements from a Trial Balance [LO 4-1, LO 4-4] Skip to question [The following information applies to the questions displayed below.] Campbell Containers reported its balance sheet at May 31, 2019. Assume the following alphabetically listed accounts were included in its trial balance immediately prior to preparing the financial statements. Campbell Containers Adjusted Trial Balance At May 31, 2019 (millions of dollars) Debit Credit Accounts Payable $ 3,200 Accounts Receivable $ 5,300 Accumulated Depreciation 19,900 Cash 5,200 Common Stock 3,000 Depreciation Expense 2,700 Dividends 200 Equipment 38,700 Goodwill 4,100 Income Tax Expense 1,050 Income Tax Payable 1,050 Interest Expense 130 Interest Receivable 40 Interest Revenue 50 Notes Payable (long-term) 8,000 Notes Payable (short-term) 450 Office Expenses 7,570 Prepaid Rent 1,000 Rent Expense 2,800 Repairs and Maintenance Expense 2,200 Retained Earnings 16,920 Salaries and Wages Expense 16,900 Salaries and Wages Payable 2,000 Service Revenue 46,000 Supplies 480 Transportation Expense 12,200 $ 100,570 $ 100,570 E4-2 (Algo) Part 3 Required: 3-a. Prepare an income statement for the year ended May 31, 2019. 3-b. Prepare a statement of retained earnings for the year ended May 31, 2019. 3-c. Prepare a classified balance sheet at May 31, 2019.
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.
E4-2 (Algo) Identifying Adjustments and Preparing Financial Statements from a Trial Balance [LO 4-1, LO 4-4]
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[The following information applies to the questions displayed below.]
Campbell Containers reported its balance sheet at May 31, 2019. Assume the following alphabetically listed accounts were included in its trial balance immediately prior to preparing the financial statements.
| Campbell Containers | ||
| Adjusted Trial Balance | ||
| At May 31, 2019 | ||
| (millions of dollars) | ||
| Debit | Credit | |
|---|---|---|
| Accounts Payable | $ 3,200 | |
| Accounts Receivable | $ 5,300 | |
| 19,900 | ||
| Cash | 5,200 | |
| Common Stock | 3,000 | |
| Depreciation Expense | 2,700 | |
| Dividends | 200 | |
| Equipment | 38,700 | |
| 4,100 | ||
| Income Tax Expense | 1,050 | |
| Income Tax Payable | 1,050 | |
| Interest Expense | 130 | |
| Interest Receivable | 40 | |
| Interest Revenue | 50 | |
| Notes Payable (long-term) | 8,000 | |
| Notes Payable (short-term) | 450 | |
| Office Expenses | 7,570 | |
| Prepaid Rent | 1,000 | |
| Rent Expense | 2,800 | |
| Repairs and Maintenance Expense | 2,200 | |
| 16,920 | ||
| Salaries and Wages Expense | 16,900 | |
| Salaries and Wages Payable | 2,000 | |
| Service Revenue | 46,000 | |
| Supplies | 480 | |
| Transportation Expense | 12,200 | |
| $ 100,570 | $ 100,570 |
E4-2 (Algo) Part 3
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3-a. Prepare an income statement for the year ended May 31, 2019.
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3-b. Prepare a statement of retained earnings for the year ended May 31, 2019.
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3-c. Prepare a classified balance sheet at May 31, 2019.
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