Get Instant Help From 5000+ Experts For
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing:Proofread your work by experts and improve grade at Lowest cost

And Improve Your Grades
myassignmenthelp.com
loader
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!
Free Quote
wave
Paul services Trial Balance As At 30 June 2016
Account No Account Name Debit
101 Cash at Bank 48230.00
105 Accounts Receivable 16080.00
115 Supplies 1480.00
120 Prepaid Insurance 2960.00
135 Office Furniture 37000.00
140 Office Equipment 74000.00
145 Store Equipment 111000.00
170 Automobile 148000.00
201 Paul's Drawings 148.00
201 Advertising Expense 1000.00
201 Automobile Expense 5775.00
201 Depreciation Expense - Furniture 0.00
201 Depreciation Expense - Equipment 0.00
201 Depreciation Expense - Store Equipment 0.00
201 Depreciation Expense - Automobile 0.00
201 Insurance Expense 800.00
201 Maintenance Expense 3500.00
201 Miscellaneous Expense 1155.00
201 Rent Expense 0.00
201 Supplies Expense 0.00
201 Utilities Expense 0.00
201 Interest Expense 0.00
  Total 451128.00

Analysis and Calculation

A report has been prepared on the business accounting concepts. The unadjusted Trial Balance of the company has been given along with the sheet showing the various adjustments. The journal entries have been passed based on the adjustment given and the adjusted trial balance has been prepared (Dumay & Baard, 2017). Post this the income statement has been prepared and the closing entries have been passed in the journal books. Finally the balance sheet and the statement of changes in equity was also being plotted. Post the analysis section, the theoretical question on the need of financial statements and why the same is being prepared has been done.

Analysis and Calculation

The initial trial balance of the company named “Paul Services” as on 30th June 2016 has been shown below:

Paul services Trial Balance As At 30 June 2016

Account No

Account Name

 Unadjusted

 Debit

101

Cash at Bank

       48,230

105

Accounts Receivable

      16,080

115

Supplies

         1,480

120

Prepaid Insurance

         2,960

135

Office Furniture

      37,000

140

Office Equipment

      74,000

145

Store Equipment

    111,000

170

Automobile

    148,000

201

Insurance Expense

            800

201

Maintenance Expense

         3,500

201

Miscellaneous Expense

         1,155

Total

    451,128

The adjustment journal entries are being shown below:

Paul Services

Adjustment Journal Entries

Date

Particulars

Dr./Cr.

 Amt

30-Jun

Interest Expense

Dr.

          14,800

30-Jun

Insurance Expense

Dr.

             2,368

30-Jun

Depreciation Expense - Furniture

Dr.

             2,219

30-Jun

Depreciation Expense - Equipment

Dr.

             5,370

30-Jun

Depreciation Expense - Store Equipment

Dr.

             4,370

30-Jun

Depreciation Expense - Automobile

Dr.

             6,521

30-Jun

Revenue

Dr.

             9,250

The Adjusted Trial balance post all the adjustments has been shown below:

The income statement of the company for the year ended 30th June 2016 is shown below:

Paul Services

Income Statement

For the period ended 30th June 2016

Particulars

 Amt ($)

Advertising Expense

               1,000

Automobile Expense

               5,775

Depreciation Expense - Furniture

               2,219

Depreciation Expense - Equipment

               5,370

Depreciation Expense - Store Equipment

               4,370

Depreciation Expense - Automobile

               6,521

Insurance Expense

               3,168

Maintenance Expense

               3,500

Miscellaneous Expense

               1,155

Supplies Expense

               1,110

Interest Expense

             14,800

The closing journal entries for the company for the period ended 30th June 2016 is shown below:

Paul Services

Closing Journal Entries

Date

Particulars

Dr./Cr.

 Amt

To Profit and Loss Account

Cr.

        138,750

To Advertising Expense

Cr.

            1,000

To Automobile Expense

Cr.

            5,775

To Depreciation Expense - Furniture

Cr.

            2,219

To Depreciation Expense - Equipment

Cr.

            5,370

To Depreciation Expense - Store Equipment

Cr.

            4,370

To Depreciation Expense - Automobile

Cr.

            6,521

To Insurance Expense

Cr.

            3,168

To Maintenance Expense

Cr.

            3,500

To Miscellaneous Expense

Cr.

            1,155

To Supplies Expense

Cr.

            1,110

To Interest Expense

Cr.

          14,800

To Retained Earnings

Cr.

          89,763

The balance sheet and the statement of changes in equity of the company post all the adjustments and the profit and loss account is as follows:

Paul Services

Balance Sheet

as on 30th June 2016

Particulars

 Amt ($)

Office Furniture

             37,000

Acc. Depreciation. - Furniture

             (2,219)

Office Equipment

             74,000

Acc. Depreciation - Equipment

             (5,370)

Store Equipment

          111,000

Acc. Depreciation - Equipment

             (4,370)

Automobile

          148,000

Acc. Depreciation - Automobile

             (6,521)

Cash at Bank

             48,230

Accounts Receivable

             16,080

Supplies

                   370

Prepaid Insurance

                   592

Loan Payable

               7,400

Mortgage Payable

          148,000

Accounts Payable

             32,160

Interest Payable

             63,040

Unearned revenue

             27,750

Paul's Capital

             48,828

Paul's Drawings

                (148)

Profit for the year

             89,763

Discussion

Trial Balance

A trial balance is the list of all the closing balances of all the given accounts in a company as on the given date and it is the 1st thing which is being done as a part of the financial statements preparation. This is generally being prepared at the end of the given accounting year as it helps to know the balances of different accounts and where all the adjustments are required for closure of books.

It also helps to verify if the total of the debit side is equal to the credit side (Gooley, 2016). In the given case, the list of all the accounts or ledgers along with the account numbers or the ledger codes are being listed and alongside it two columns are prepared, one for the debit totals of the accounts and another for the credit totals of the accounts. IN case the debit and the credit sides are not equal, it indicates that there is some error in the accounting cycle and the same needs to be corrected (Alexander, 2016).

Adjustment Journal Entries

Adjustment entries are the ones, which are being passed before the closure of the books of accounts. These are generally passed to accommodate for the errors if any in the accounting cycle or if any income or expenses pertaining to the particular period has not been recognized in the books. There are many such transactions, which start in the given accounting period but may end in the later period. For properly accounting the same, an adjusting journal entry is required in the books such the financial reporting is being correctly at the year-end (Heminway, 2017).

Trial Balance

The other purpose of recording the adjustment entries is to convert the real time entries in to the accrual system. Suppose in the given case, the depreciation entries on all the assets (furniture, office equipment, store equipment, etc.) was not being passed initially and hence the same was included as a part of the adjustment entries. Furthermore, there was prepaid insurance, which was being paid for future periods initially during the year. The same had to be adjusted towards the year-end to account for the expenses for the current period. Most of the adjusting journal entries relate to the concept of prepaid, accrual, outstanding, unearned expenses and incomes respectively (Bromwich & Scapens, 2016). It is done to ensure the matching and accrual principles of accounting.

Adjusted Trial balance

Adjusted trial balance is the pre-requisite for preparation of the financial statements. It is the consolidated list of all the account titles or ledgers along with the respective debit and credit balances. It is prepared after taking into account the effect of the adjustment journal entries in the books (Fay & Negangard, 2017). The adjusted trial balance is for the use of preparation of the final financial statement, is an internal document, and is not to be reported in the annual report of the company. One more use of preparation of the adjusted trial balance is it helps in the preparation of the all the financial statements income the income statement or the profit and loss account, the balance sheet of the company and the statement of changes in the equity (Linden & Freeman, 2017).

Closing Journal Entries

Closing journal entries are much different from the adjustment journal entries. The closing journal entries are being prepared at the end of the period to set or to transfer the balances of all the temporary accounts to the permanent accounts and make them zero. This process is commonly referred to as the closing of the books of accounts (Trieu, 2017). Temporary accounts are the accounts, which form part of the income statement of the company, which usually shows the results of the accounting activity over the year.

Some examples of temporary accounts is revenue, other incomes, expenses, Cost of goods sold, taxes, interest, depreciation, etc. On the other hand, permanent accounts are the balance sheet accounts, which last more than an accounting period, and hence the same needs to be carried forward. Few examples of the permanent account includes asset account, land, building, furniture, equipment, cash, debtors, inventory, liabilities like current and non-current liabilities account, creditors, payables, bank loan, equity reserves, etc. (Choy, 2018).

References

Alexander, F., 2016. The Changing Face of Accountability. The Journal of Higher Education, 71(4), pp. 411-431.

Bromwich, M. & Scapens, R., 2016. Management Accounting Research: 25 years on. Management Accounting Research, Volume 31, pp. 1-9.

Choy, Y. K., 2018. Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis. Ecological Economics, p. 145.

Dumay, J. & Baard, V., 2017. An introduction to interventionist research in accounting.. The Routledge Companion to Qualitative Accounting Research Methods, p. 265.

Fay, R. & Negangard, E., 2017. Manual journal entry testing : Data analytics and the risk of fraud. Journal of Accounting Education, Volume 38, pp. 37-49.

Gooley, J., 2016. Principles of Australian Contract Law. Australia: Lexis Nexis.

Heminway, J., 2017. Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents. SSRN, pp. 1-35.

Linden, B. & Freeman, R., 2017. Profit and Other Values: Thick Evaluation in Decision Making. Business Ethics Quarterly, 27(3), pp. 353-379.

Trieu, V., 2017. Getting value from Business Intelligence systems: A review and research agenda. Decision Support Systems, Volume 93, pp. 111-124.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2021). Business Accounting Concepts: Analysis And Calculation Essay.. Retrieved from https://myassignmenthelp.com/free-samples/bacc16-corporate-governance-and-ethics/theoretical-question.html.

"Business Accounting Concepts: Analysis And Calculation Essay.." My Assignment Help, 2021, https://myassignmenthelp.com/free-samples/bacc16-corporate-governance-and-ethics/theoretical-question.html.

My Assignment Help (2021) Business Accounting Concepts: Analysis And Calculation Essay. [Online]. Available from: https://myassignmenthelp.com/free-samples/bacc16-corporate-governance-and-ethics/theoretical-question.html
[Accessed 24 November 2024].

My Assignment Help. 'Business Accounting Concepts: Analysis And Calculation Essay.' (My Assignment Help, 2021) <https://myassignmenthelp.com/free-samples/bacc16-corporate-governance-and-ethics/theoretical-question.html> accessed 24 November 2024.

My Assignment Help. Business Accounting Concepts: Analysis And Calculation Essay. [Internet]. My Assignment Help. 2021 [cited 24 November 2024]. Available from: https://myassignmenthelp.com/free-samples/bacc16-corporate-governance-and-ethics/theoretical-question.html.

Get instant help from 5000+ experts for
question

Writing: Get your essay and assignment written from scratch by PhD expert

Rewriting: Paraphrase or rewrite your friend's essay with similar meaning at reduced cost

Editing: Proofread your work by experts and improve grade at Lowest cost

loader
250 words
Phone no. Missing!

Enter phone no. to receive critical updates and urgent messages !

Attach file

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Plagiarism checker
Verify originality of an essay
essay
Generate unique essays in a jiffy
Plagiarism checker
Cite sources with ease
support
close