Required: (A) Use the following adjusted trial balance to prepare a properly formatted multi-step income statement (including EPS), statement of retained earnings, and classified balance sheet. Adjusted Trial Balance Account Titles Dr Cr Cash 26,143 Equity securities portolio 47,521 Fair value adjustment 3,585 Accounts receivable 284,171 Allowance for doubtful accounts 14,209 Inventory 623,636 Prepaid insurance 11,080 Land 414,518 Buildings 1,455,667 Accumulated depreciation-bldg 490,534 Equipment 1,041,038 Accumulated depreciation-equip 337,259 Deferred tax asset 6,000 Patent 17,970 Accounts payable 205,799 Income taxes payable 108,659 Note payable 42,000 Bonds payable 300,000 Premium on bonds payable 16,038 Preferred stock (5%, $100 par) 200,000 Common stock ($10 par value) 400,000 Paid-In capital in excess of par 471,999 Retained earnings 934,729 Dividends 90,000 Sales revenue 4,634,536 Cost of goods sold 3,172,647 Salaries and wages expense 580,593 Advertising expense 65,641 Depreciation expense 161,167 Other administrative expenses 24,772 Supplies expense 4,894 Amortization expense 11,000 Gain on sale of trading securities 4,894 Rent revenue 3,900 Interest expense 19,877 Gain on sale of land 1,507 Loss on sale of equipment 17,280 Income tax expense 110,659 Totals Additional accounts: Unrealized gain/ loss on securities 7,685 Bad debt expense 8,089 Insurance expense 5,240 Interest payable 24,630 Impairment loss 26,030 Salaries and wages payable 31,560 Supplies 720 Totals 8,229,937 8,229,937
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.
Required: (A) Use the following adjusted
| Adjusted Trial Balance | ||
| Account Titles | Dr | Cr |
| Cash | 26,143 | |
| Equity securities portolio | 47,521 | |
| Fair value adjustment | 3,585 | |
| Accounts receivable | 284,171 | |
| Allowance for doubtful accounts | 14,209 | |
| Inventory | 623,636 | |
| Prepaid insurance | 11,080 | |
| Land | 414,518 | |
| Buildings | 1,455,667 | |
| 490,534 | ||
| Equipment | 1,041,038 | |
| Accumulated depreciation-equip | 337,259 | |
| 6,000 | ||
| Patent | 17,970 | |
| Accounts payable | 205,799 | |
| Income taxes payable | 108,659 | |
| Note payable | 42,000 | |
| Bonds payable | 300,000 | |
| Premium on bonds payable | 16,038 | |
| 200,000 | ||
| Common stock ($10 par value) | 400,000 | |
| Paid-In capital in excess of par | 471,999 | |
| Retained earnings | 934,729 | |
| Dividends | 90,000 | |
| Sales revenue | 4,634,536 | |
| Cost of goods sold | 3,172,647 | |
| Salaries and wages expense | 580,593 | |
| Advertising expense | 65,641 | |
| Depreciation expense | 161,167 | |
| Other administrative expenses | 24,772 | |
| Supplies expense | 4,894 | |
| Amortization expense | 11,000 | |
| Gain on sale of trading securities | 4,894 | |
| Rent revenue | 3,900 | |
| Interest expense | 19,877 | |
| Gain on sale of land | 1,507 | |
| Loss on sale of equipment | 17,280 | |
| Income tax expense | 110,659 | |
| Totals | ||
| Additional accounts: | ||
| Unrealized gain/ loss on securities | 7,685 | |
| 8,089 | ||
| Insurance expense | 5,240 | |
| Interest payable | 24,630 | |
| Impairment loss | 26,030 | |
| Salaries and wages payable | 31,560 | |
| Supplies | 720 | |
| Totals | 8,229,937 | 8,229,937 |
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