ACCT 2000 Lecture Notes - Lecture 9: Deferral, Financial Statement, Income Statement

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champagnepanda731

28 Aug 2017

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Document Summary

Adjusting entries are the movement of money between the balance sheet and income statement in order to get the account balances correct before financial statements are prepared. Adjusting entry one side of the entry (debit/credit) must come from the balance sheet (asset or liability) and one side of the entry (debit/credit) must come from the income statement (revenue/expense). Once account balances are correct (after adjusting entries), financial statements can be produced. Deferrals: prepaid expenses (examples prepaid insurance, supplies, depreciation) For amount used up: unearned revenue (example unearned ticket revenue) Accruals : accrued revenue revenue earned but not received (or billed) For amount earned: accrued expenses - expenses incurred (owed) but not yet paid. (example - interest, salaries, utilities)

Related Questions

The ledger of Nash Rental Agency on March 31 of the current year includes the following selected accounts before adjusting entries have been prepared. Debit Credit Prepaid Insurance $3,492 Supplies 2,593 Equipment 25,040 Accumulated Depreciation-Equipment $7,743 Notes Payable 20,290 Unearned Rent Revenue 4,080 Rent Revenue 61,870 Interest Expense â0â Salaries and Wages Expense 15,040 An analysis of the accounts shows the following. 1. The equipment depreciates $272 per month. 2. One-third of the unearned rent was earned as revenue during the quarter. 3. Interest of $520 is accrued on the notes payable. 4. Supplies on hand total $609. 5. Insurance expires at the rate of $291 per month. Prepare the adjusting entries at March 31, assuming that adjusting entries are made quarterly. Additional accounts are Depreciation Expense, Insurance Expense, Interest Payable, and Supplies Expenses. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit

No.

Account Titles and Explanation

Debit

Credit

rubyhorse721

The following adjustments need to be made before the financialstatements can be prepared at the end of the year.
Task 1: Enter the necessary journal entries into the templateprovided and provide the journal entry for each.

December Interest on a bank loan is due on January 2nd of thefollowing year: accrue $1,000.
A contractor (outside services) has finished work on December 31st,but the invoice will not be received until January 7th of thefollowing year: accrue $750. A rent payment was made on December1st for three months from December 1st to February 28th of thefollowing year (6,000 in total). Record the transactionproperly.

The companyâs part-time employees worked a total of 50 hours inDecember, but will get paid only by January 5th. The hourly rate is$15.
The company must record the payment of its annual insurance premiumfor next year. The annual premium is $1,200, an adjustment isnecessary to prepaid insurance.

Task 2: Provide the adjusted trial balance (combine exercises2.1 and 2.2 to show the adjusted trial balance).

Interest Expense

Interest Payable

To record December interest expense to bepaid in January

Expense for Outside Services

Accounts Payable

To record liability towardscontractor

Rental Expenses

Prepaid Rent

Cash

To record the appropiate rental expensefor the month

Wage Expense