Certain adjusting entries made at the end of an accounting period are reversed at the beginning of the following period. Required: Analyze the following four adjusting entries made on December 31, and determine whether a reversing entry is needed. Date Description Debit Credit Reversing entry Reversing entry necessary not necessary Dec. 31 Interest Receivable 1,200 O 1,200 31 Rent Expense 1,000 1,000 31 Interest Expense 800 800 31 Supplies Expense 520 Supplies Interest Revenue Prepaid Rent Interest Payable 520 O x 3 ?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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### Reversing Entries: Adjusting Entries Analysis

Certain adjusting entries made at the end of an accounting period are reversed at the beginning of the following period.

**Required:**
Analyze the following four [adjusting entries](https://www.yourwebsite.com/adjusting-entries) made on December 31, and determine whether a [reversing entry](https://www.yourwebsite.com/reversing-entry) is needed.

#### Adjusting Entries Table

| Date             | Description         | Debit   | Credit  | Reversing entry necessary | Reversing entry not necessary |
|------------------|---------------------|---------|---------|---------------------------|-------------------------------|
| Dec. 31          | Interest Receivable | 1,200   |         | ![Selected](https://www.yourwebsite.com/circle) |                               |
|                  | Interest Revenue    |         | 1,200   |                           |                               |
| Dec. 31          | Rent Expense        | 1,000   |         |                           | ![Selected](https://www.yourwebsite.com/circle) | 
|                  | Prepaid Rent        |         | 1,000   |                           |                               |
| Dec. 31          | Interest Expense    | 800     |         | ![Selected](https://www.yourwebsite.com/circle) |                               |
|                  | Interest Payable    |         | 800     |                           |                               |
| Dec. 31          | Supplies Expense    | 520     |         |                           | ![Selected](https://www.yourwebsite.com/circle) | 
|                  | Supplies            |         | 520     |                           |                               |

**Legend:**
- ![Selected](https://www.yourwebsite.com/circle): Indicates the selection made for whether a reversing entry is necessary.

### Explanation
Click [here](https://www.yourwebsite.com/explanation) for a detailed explanation of why reversing entries might be necessary for interest receivables and expenses but not for prepaid rent and supply expenses.

### Additional Resources
- [Adjusting Entries](https://www.yourwebsite.com/adjusting-entries)
- [Reversing Entries](https://www.yourwebsite.com/reversing-entry)

*Note: The linked images and URLs are placeholders and should be replaced with actual content when integrating into your educational website.*
Transcribed Image Text:### Reversing Entries: Adjusting Entries Analysis Certain adjusting entries made at the end of an accounting period are reversed at the beginning of the following period. **Required:** Analyze the following four [adjusting entries](https://www.yourwebsite.com/adjusting-entries) made on December 31, and determine whether a [reversing entry](https://www.yourwebsite.com/reversing-entry) is needed. #### Adjusting Entries Table | Date | Description | Debit | Credit | Reversing entry necessary | Reversing entry not necessary | |------------------|---------------------|---------|---------|---------------------------|-------------------------------| | Dec. 31 | Interest Receivable | 1,200 | | ![Selected](https://www.yourwebsite.com/circle) | | | | Interest Revenue | | 1,200 | | | | Dec. 31 | Rent Expense | 1,000 | | | ![Selected](https://www.yourwebsite.com/circle) | | | Prepaid Rent | | 1,000 | | | | Dec. 31 | Interest Expense | 800 | | ![Selected](https://www.yourwebsite.com/circle) | | | | Interest Payable | | 800 | | | | Dec. 31 | Supplies Expense | 520 | | | ![Selected](https://www.yourwebsite.com/circle) | | | Supplies | | 520 | | | **Legend:** - ![Selected](https://www.yourwebsite.com/circle): Indicates the selection made for whether a reversing entry is necessary. ### Explanation Click [here](https://www.yourwebsite.com/explanation) for a detailed explanation of why reversing entries might be necessary for interest receivables and expenses but not for prepaid rent and supply expenses. ### Additional Resources - [Adjusting Entries](https://www.yourwebsite.com/adjusting-entries) - [Reversing Entries](https://www.yourwebsite.com/reversing-entry) *Note: The linked images and URLs are placeholders and should be replaced with actual content when integrating into your educational website.*
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