I have a question Why in the General Ledger in the Insurance Expense you have 275 in both parts debit and credit Is not only in the debit sie because we credited 275 to prepaid insurance?
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I have a question Why in the General Ledger in the Insurance Expense you have 275 in both parts debit and credit Is not only in the debit sie because we credited 275 to prepaid insurance?
The journal entry for the insurance was: Debit Insurance Expense and Credit Prepaid Insurance for the amount of insurance expired during the month. The calculation was the cost of the insurance premium purchased divided by 12 months to get one month of insurance expired.
The effects of the journal entry is that Prepaid Insurance was decreased (credited) and Insurance Expense was increased (Debited) by the amount of insurance expired in one month.
Did you look at my Worksheet to the Adjusted Trial Balance. The adjusting entry was made in the Adjustments columns and the net result of the adjusting entry is shown in the adjusted trial balance columns.
OK Thanks
Do you guys have the Financial statement? Really need help with it.Quote:
Originally Posted by sailajabadri
What do you need help with.
Start with your adjusted trial balance and create 4 columns; 2 for the Income Statement and 2 for the Balance Sheet. The only accounts that transfer to the Income Statement will be your revenues and expenses. Your other accounts will go on the balance sheet.
When you do your actual balance sheet your cash dividends will be subtracted from your retained earnings(net income on the Worksheet).
Pready,Quote:
Originally Posted by pready
Could u please help me in making a closing entries out of this financial statement.. I am very much confused about the RETAINED EARNINGS for this? Please help
Income Statement Statement of Retained Earnings Balance Sheet
For the Month Ending March 31 For the Month Ending March 31 March 31
Revenues: Retained Earnings, March 1 Assets:
Landscaping Revenue $10,200 Add: Net Income 1,855 Cash $69,250
Subtotal Prepaid Insurance 3,025
Expenses: Less: Dividends 1,000 Supplies 475
Rent Expense 4,500 Retained Earnings, March 31 $855 Equipment 9,000
Salaries Expense 2,200 Less: Accum. Depr. 150 8,850
Insurance Expense 275 Total Assets 81,600
Supplies Expense 425
Depreciation Expense 150 Liabilities:
Income Tax Expense 795 Accounts Payable 7,950
Total Expenses (-) 8,345 Income Tax Payable 795
Total Liabilities 8,745
Net Income $1,855 Stockholders' Equity:
Common Stock 72,000
Retained Earnings 855
Total Stockholders' Equity 72,855
Total Liabilities and
Stockholders' Equity $81,600
You should have the Worksheet for your financial statements. Now for the Statement of Retained Earnings you will start with the Retained Earnings Beginning Balance plus your Net Income minus your Cash Dividends equals your Retained Earnings, Ending Balance.
After you have made your financial statements you close out your income statements accounts to the Income Summary Account, then close out your Cash Dividends to your Retained Earnings. After this you will prepare a post-closing balance sheet.
Note: Use a Worksheet as it will help in preparing your financial statement. I have not used a Statement of Retained Earnings on a Worksheet, but you can add two columns between the Income Statement and the Balance Sheet. Just create a row for Retained Earnings, Beginning Balance and use Net Income, Cash Dividends, and create a row after your last totals row for Retained Earnings, Ending Balance.
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