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Ledger with their corresponding Debit/Credit value. These are then summed up
and the total debit is compared to the total credit to ensure that both sides are
equal. A Trial Balance is achieved when the total debit is equivalent to the total
credit.
Liabilities become Revenues and c) when errors occur in recording. The resulting
total debit and credit in the Adjusted Trial Balance must still remain equal.
owes the company a certain amount, are sometimes left unpaid by the debtor.
This may occur for several reasons such as the debtor being totally unable to pay
the incurred debt or a discount is given to the incurred debt. The amount,
therefore, turns into Bad Debts. Bad Debts are treated as expense and would be
doesn’t have to pay a certain amount of the debts incurred. Discounts would
sometimes be given by the creditor in cases such as the debts incurred are so
high that there are tendencies that it would take a long time to get settled, or
worse, gets unpaid. There could also be other reasons that certain amount in A/P
exist in recording. There could be instances in which values are recorded into the
wrong accounts. Because it is not allowed to simply erase and rewrite the error
as all processes must be accounted for, the Trial Balance must be corrected by
properly adjusting the accounts involved and recording it in the Adjusted Trial
Balance.
Task B
The Balance Sheet sums up all the Assets, Liabilities and Owner’s Equity.
Assets
Account Titles Balance Sheet
Debit Credit
Cash 15200
Advertising Supplies 2000
Prepaid Insurance 450 Liabilities &
Office Equipment 5000 Owner’s
Notes Payable 5000 Equity
Accounts Payable 2500
Unearned Fees 600
Bibi Gandanghari, Capital 10000
Bibi Gandanghari, Drawing 500
Fees Earned
Salaries Expense
Rent Expense
TOTALS
Advertising Supplies
Expense
Prepaid Insurance Expense
Depreciation Expense,
Office Equipment
Accumulated Depreciation,
Office Equipment 140
Accounts Receivable 300
Interest Expense
Interest Payable 150
Salaries Payable 1000
The total debit (Assets) is compared with the total credit (Liabilities and OE) and
Income Statement, must be added to the credit side of the Balance Sheet.
Income Expenses
Account Titles Statement
Debit Credit
Cash
Advertising Supplies
Revenues
Prepaid Insurance
Office Equipment
Notes Payable
Accounts Payable
Unearned Fees
Bibi Gandanghari, Capital
Bibi Gandanghari, Drawing
Fees Earned 10900
Salaries Expense 5000
Rent Expense 900
TOTALS
Advertising Supplies
Expense 500
Prepaid Insurance Expense 150
Depreciation Expense,
Office Equipment 140
Accumulated Depreciation,
Office Equipment
Accounts Receivable
Interest Expense 150
Interest Payable
Salaries Payable
TOTALS 6840 10900