accounting adjusting
TRANSCRIPT
![Page 1: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/1.jpg)
![Page 2: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/2.jpg)
Adjusting Entries
![Page 3: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/3.jpg)
PRESENTED BY
04/18/17 3
![Page 4: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/4.jpg)
CONTENT
04/18/17 4
![Page 5: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/5.jpg)
Adjusting Entries bring certain account balances up to date at the end of the accounting period.
Adjusting Entries
4/30/2017
UPDATE
Adjustments are necessary for items that have either been deferred or accrued.
![Page 6: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/6.jpg)
ADJUSTING ENTRIES
Adjusting entries are made in order for:
• revenues to be recorded in the period in which they are earned
• expenses to be recognized in the period in which they are incurred
![Page 7: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/7.jpg)
PIONEER ADVERTISING AGENCY Trial Balance October 31, 2005 Debit Credit Cash $ 15,200 Advertising Supplies 2,500 Prepaid Insurance 600 Office Equipment 5,000 Notes Payable $ 5,000 Accounts Payable 2,500 Unearned Revenue 1,200 C. R. Byrd, Capital 10,000 C. R. Byrd, Drawing 500 Service Revenue 10,000 Salaries Expense 4,000 Rent Expense 900 $ 28,700 $ 28,700
The Trial Balance is the starting place for adjusting entries.
The Trial Balance is the starting place for adjusting entries.
![Page 8: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/8.jpg)
TYPES OF ADJUSTING ENTRIES
1.Prepaid Expenses2. Unearned Revenues
1.Accrued Revenues2. Accrued Expenses
![Page 9: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/9.jpg)
Deferrals
![Page 10: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/10.jpg)
ADJUSTING ENTRIES FOR DEFERRALS
Asset
Unadjusted Balance
Credit Adjusting Entry (-)
Expense
Debit Adjusting Entry (+)
Prepaid Expenses
Liability
Unadjusted Balance
Debit Adjusting Entry (-)
Revenue
Credit Adjusting Entry (+)
Unearned Revenues
![Page 11: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/11.jpg)
insurance
supplies
advertising
Cash Payment Expense RecordedBEFORE
rent
equipment
buildings
Prepayments often occur in regard to:
Prepaid Expenses
LO 2
![Page 12: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/12.jpg)
Illustration: Pioneer Advertising purchased
supplies costing $2,500 on October 5 .An
inventory count at the close of business on
October 31 reveals that $1,000 of supplies are
still on hand.
Supplies 1,500
Supplies Expense 1,500Oct. 31
SUPPLIES
Adjusting Entries
(Adjusting supplies(2500-1000))
![Page 13: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/13.jpg)
Illustration: On October 4, Pioneer
Advertising paid $600 for a one-year fire
insurance policy. This account shows a balance
of $600 in the October 31 trial balance.
Prepaid Insurance 50
Insurance Expense 50Oct. 31
INSURANCE
(Adjusting insurance ($600 ÷ 12))
Adjusting Entries
![Page 14: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/14.jpg)
40
Illustration: For Pioneer Advertising,
assume that depreciation on the
equipment is $480 a year.
Accumulated depreciation 40
Depreciation expenseOct. 31
Accumulated Depreciation is called a contra asset account.
DEPRECIATION
(Adjusting insurance ($480 ÷ 12))
Adjusting Entries
![Page 15: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/15.jpg)
Rent
Airline tickets
Cash Receipt Revenue RecordedBEFORE
Magazine subscriptions
Customer deposits
Unearned revenues often occur in regard to:
Unearned Revenues
![Page 16: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/16.jpg)
Illustration: Pioneer Advertising received
$1,200 on October 2 from R. Knox for
advertising services expected to be completed
by December 31
Service Revenue 400
Unearned Service Revenue 400Oct. 31
Unearned Revenues
Adjusting Entries
(Adjusting service revenue ($1,200/3))
![Page 17: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/17.jpg)
Accruals
![Page 18: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/18.jpg)
Asset
Debit Adjusting Entry (+)
Accrued RevenuesRevenue
Credit Adjusting Entry (+)
Accrued ExpensesExpense
Debit Adjusting Entry (+)
Liability
Credit Adjusting Entry (+)
ADJUSTING ENTRIES FOR ACCRUALS
![Page 19: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/19.jpg)
Rent
Interest
Services
Accrued revenues often occur in regard to:
BEFORE Cash ReceiptRevenue Recorded
Accrued Revenues
![Page 20: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/20.jpg)
Illustration: In October Pioneer
Advertising performed services worth
$200 that were not billed to clients on or
before October 31.
200
Service Revenue 200
Accounts Receivable
Oct. 31
Accrued Revenues
Adjusting Entries
(Adjusting service revenue $200)
![Page 21: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/21.jpg)
Rent
Interest
Taxes
Salaries
Accrued expenses often occur in regard to:
BEFORE Cash PaymentExpense Recorded
Accrued Expenses
![Page 22: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/22.jpg)
Illustration: Pioneer Advertising signed a three-month
note payable in the amount of $5,000 on October 1. The
note requires Pioneer to pay interest at an annual rate of
12%.
Interest payable 50
Interest expense 50Oct. 31
Accrued Interest
Adjusting Entries
(Adjusting interest ($5,000*.12)/12)
![Page 23: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/23.jpg)
ADJUSTED TRIAL BALANCE
• Adjusted Trial Balance – prepared after all adjusting entries have
been journalized and posted
– purpose is to prove equality of the total debit and credit balances in the ledger after adjustments have been made
![Page 24: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/24.jpg)
Owner’s Equity
Statement
Financial Statements are prepared directly from the Adjusted Trial Balance.
Financial Statements are prepared directly from the Adjusted Trial Balance.
Income Statement
Balance Sheet
Financial Statements
LO 4
![Page 25: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/25.jpg)
Any Question???
![Page 26: Accounting adjusting](https://reader033.vdocuments.site/reader033/viewer/2022051007/5a65497c7f8b9a5b558b6245/html5/thumbnails/26.jpg)