Finance for Small Businesses
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Filed under Finance.
accounting periods, adjusting entries, closing the books, daily transactions, end-of-period closing, general journals, accounting, bookkeeping, managing business finances, accrued property tax, accrual accounting, adjusting entries, taxes payable, accrued FICA, employment.
Certain end-of-period adjustments must be made when you close your books. Adjusting entries are made at the end of an accounting period to account for items that don't get recorded in your daily transactions. In a traditional accounting system, adjusting entries are made in a general journal.
Some adjusting entries are straightforward. Others require judgment and some accounting knowledge. You will have to decide if you are going to tackle some or all adjusting entries, or if you want to pay your accountant to do them. If your accountant prepares adjusting entries, he or she should give you a copy of these entries so that you can enter them in your general ledger.
The following are typical items that might require adjusting journal entries. Some, but not all, should apply to your business:
After all adjusting entries are made, do the following to complete your books for the accounting period:
If you have employees, chances are you owe them a certain amount of wages at the end of an accounting period. If so, an adjusting entry is required in your general journal.
|To accrue wages owed but unpaid on 12/31/2010|
One component of the payroll taxes you deposit with the government is FICA tax (made up of Social Security and Medicare taxes) One-half of the FICA you pay is withheld from employees; the other half is your share (an expense of the business). If you have payroll taxes due at the end of an accounting period that will be paid next period, you should accrue the employer share of FICA that is due at period end. This is done with an adjusting entry in your general journal.
|Payroll taxes expense||210.25|
|Payroll taxes payable||210.25|
|To accrue employer share of FICA owed but unpaid on 12/31/2010|