Transaction Type Amount Total Dividends or Retained Earnings 13000 Cash 13000

Transaction type amount total dividends or retained

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Transaction Type Amount Total Dividends (or Retained Earnings) 13,000 Cash 13,000 Step 4: Posting to the ledger accounts: 1. A ledger is a collection of accounts maintained by a business. 2. The transfer of information from the journal to the ledger is referred to as “ posting .” Step 4: Posting to the ledger accounts 1: C:\Users\sfurner\Desktop\Accounting Final Needed Materials\Final Exam Study Guide ACCT 701.docx
Step 5: Preparing a trial balance: 1. After all transactions for the period have been posted to the general ledger, the balance for each account is determined. 2. A trial balance is a list of all ledger accounts and their respective balances. 3. It provides a means to assure that total debits equal total credits. Step 5: Preparing a trial balance 1: Type Debit Credit Cash 83,110 - Accounts Receivable 106,500 - Allowance for Bad Debts - 1,610 Inventory 45,000 - Prepaid Insurance 8,000 - Interest Receivable 0 - Land 114,000 - Buildings 156,000 - Accumulated Depreciation – Buildings - 39,000 Furniture 19,000 - Accumulated Depreciation – Furniture & Equipment - 3,800 Accounts Payable - 37,910 Unearned Rent Revenue - 0 Salaries and Wages Payable - 0 Interest Payable - 0 C:\Users\sfurner\Desktop\Accounting Final Needed Materials\Final Exam Study Guide ACCT 701.docx
Income Taxes Payable - 0 Dividends Payable - 3,400 Bonds Payable - 140,000 Common Stock, $0.10 par - 150,000 Retained Earnings - 103,900 Dividends 13,600 - Sales - 479,500 Cost of Goods Sold 159,310 - Salaries and Wages Expense 172,450 - Heat, Light, and Power Expense 32,480 - Payroll Tax Expense 18,300 - Advertising Expense 18,600 - Bad Debt Expense 0 - Depreciation Expense-Buildings 0 - Depreciation Expense – Furniture and Equipment 0 - Insurance Expense 0 - Rent Revenue - 2,550 Interest Expense 16,420 - Income Tax Expense 0 - Totals $962,770 $962,770 Step 6: Preparing Adjusting Entries: o Although the majority of accounts are up to date at the end of the accounting period and their balances can be included in the financial statements, some accounts require adjustment to reflect current circumstances. o At the end of each accounting period, in order to report all asset, liability, and owners’ equity amounts properly and to recognize all revenues and expenses for the period on an accrual basis, accountants are required to make adjusting entries prior to preparing financial statements. Step 7: Preparing financial statements: 1. Identify all revenues and expenses—these account balances are used to prepare the income statement. 2. Compute the net income—subtract expenses from revenues. 3. Compute the ending Retained Earnings balance. 4. Prepare a balance sheet using the balance sheet accounts from the trial balance and the modified retained earnings balance. Step 7: Preparing financial statements 1: C:\Users\sfurner\Desktop\Accounting Final Needed Materials\Final Exam Study Guide ACCT 701.docx
Step 8: Close nominal accounts: o Nominal (or temporary ) accounts: o All income statement accounts are closed at the end of the period by transferring their net balance to a Real Account. Usually that Real Account is Retained Earnings.

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