Income Statement For the Year Ended December 31, 2022 Revenues Sales revenue Interest revenue Total revenues Expenses Cost of goods sold $33,000 Salaries and wages expense 13,000 Interest expense 1,000 Total expenses Net Income Interest Revenue Prepare the entries to close the revenue and expense accounts at December 31, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Dec. 31 Sales Revenue Income Summary (To close revenue accounts) Dec. 31 Income Summary Cost of Goods Sold Salarles and Wages Expense $58,000 3,000 $61,000 Interest Expense (To close expense accounts) 47,000 $14,000 Debit 58,000 3,000 33,000 13,000 1,000 Credit 61,000 000
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.
![The income statement for Pepe Serna Company for the year ended December 31, 2022 is as follows:
PEPE SERNA COMPANY
Income Statement
For the Year Ended December 31, 2022
Revenues
Sales revenue
Interest revenue
Total revenues
Expenses
Cost of goods sold
Salaries and wages expense
Interest expense
Total expenses
Net Income
Dec. 31
Sales Revenue
Interest Revenue
Income Summary
$33,000
Cost of Goods Sold
13,000
Prepare the entries to close the revenue and expense accounts at December 31, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date Account Titles and Explanation
Dec. 31
Income Summary
(To close revenue accounts)
1,000
Interest Expense
Salarles and Wages Expense
$58,000
(To close expense accounts)
3,000
$61,000
47,000
$14,000
Debit
58,000
3,000
33,000
13,000
1,000
Credit
61,000
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