Concept explainers
(1)
Adjusting entries are those entries which are made at the end of the accounting period, to record the revenues in the period of which they have been earned and to record the expenses in the period of which have been incurred, as well as to update all the balances of assets and liabilities accounts on the balance sheet, and to ascertain accurate amount of net income (loss) on the income statement to maintain the records according to the accrual basis principle.
Accounting rules for journal entries:
- To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains.
- To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains.
Adjusted
Adjusted trial balance is that statement which contains complete list of accounts with their adjusted balances, after all relevant adjustments have been made. This statement is prepared at the end of every financial period.
To prepare: All required adjusting entries at November 30.
(2)
To prepare: An adjusted trial balance as of November 30 for CC Cleaning.
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Horngren's Financial & Managerial Accounting, The Financial Chapters (Book & Access Card)
- Instructions: Prepare an Adjusted Trial balance. Your guide is the new ending balance after adjustments for each account. Additional Information a. Physical count of unused supplies on December 31 were conducted and amounted to P900. b. Equipment is being depreciated over a 10 year period without salvage value. The equipment was purchased two years ago. c. Prepaid rent reflected in the unadjusted trial balance was paid on September 1 to cover six-month period. d. Last two-week salary at P2,750 per week for the month of December will be paid on January 3 of the following year. e. The balance of unearned fees at December 31 should be P5,500. f. Lopez additional fee of P12,250 from his last client was still unrecorded and remained uncollected at year-end.arrow_forwardCALCULATING AND JOURNALIZING DEPRECIATION Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the case of assets acquired after the fifteenth day of the month, no depreciation should be considered for the month in which the asset was acquired. REQUIRED 1. Calculate the depreciation expense for Johnson Machine as of December 31, 20--. 2. Prepare the entry for depreciation expense using a general journal.arrow_forwardPreparing and Journalizing Adjusting Entries For each of the following separate situations, prepare the necessary adjustments (a) using the finan- cial statement effects template, and (b) in journal entry form. 1. Unrecorded depreciation on equipment is $610. 2.Onthedateforpreparingfinancialstatements,anestimatedutilitiesexpenseof$390hasbeen incurred, but no utility bill has yet been received or paid. 3.Onthefirstdayofthecurrentperiod,rentforfourperiodswaspaidandrecordedasa$2,800 debit to Prepaid Rent and a $2,800 credit to Cash. 4.Ninemonthsago,the Hartford Financial Services Group soldaone-yearpolicytoacustomer andrecordedthereceiptofthepremiumbydebitingCashfor$624andcreditingContract Liabilitiesfor$624.Noadjustingentrieshavebeenpreparedduringthenine-monthperiod. Hartford’s annual financial statements are now being prepared. 5.Attheendoftheperiod,employeewagesof$965havebeenincurredbutnotyetpaidor recorded. 6. At the end of the period, $300 of interest income has been earned but not…arrow_forward
- Instructions: Prepare an Income Statement. Your guide is the new ending balance after adjustments for each account. Additional Information a. Physical count of unused supplies on December 31 were conducted and amounted to P900. b. Equipment is being depreciated over a 10 year period without salvage value. The equipment was purchased two years ago. c. Prepaid rent reflected in the unadjusted trial balance was paid on September 1 to cover six-month period. d. Last two-week salary at P2,750 per week for the month of December will be paid on January 3 of the following year. e. The balance of unearned fees at December 31 should be P5,500. f. Lopez additional fee of P12,250 from his last client was still unrecorded and remained uncollected at year-end.arrow_forwardB. D E G H. J K 3. Create the fixed asset supporting schedule for the following purchases: Two fixed assets are purchased during the year: Computer server on 5/4/2014 for $2,214.55 Office furniture on 11/17/2014 for $1,234.54 MACRS 150% is going to be the depreciation method used and depreciation adjusting entries are made at the end of each month. (check figure: total depreciation expense = 107.63) What will be the depreciation general journal adjusting entry on 12/31/2014?arrow_forwardCalculating and Journalizing Depreciation Equipment records for Johnson Machine Co. for the year follow. Johnson Machine uses the straight-line method of depreciation. In the case of assets acquired by the fifteenth day of the month, depreciation should be computed for the entire month. In the case of assets acquired after the fifteenth day of the month, no depreciation should be considered for the month in which the asset was acquired. Purchase Salvage Date Asset Price Useful Life Value Purchased 8 years January 1 Truck #1 $20,000 $4,000 Truck #2 24,000 8 4,000 April 10 Tractor #1 18,000 3,000 Мay 1 Tractor #2 14,000 6 2,000 June 18 Forklift 40,000 10 4,000 September 1 Required: 1. Calculate the depreciation expense for Johnson Machine as of December 31, 20- 116,000 x Feedback 2. Prepare the entry for depreciation expense using a general journal. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 20-- Dec. 31 2 3arrow_forward
- Required 1. Prepare and complete a 10-column work sheet for fiscal year 2019, starting with the unadjusted trial balance and including adjustments based on these additional facts. a. The supplies available at the end of fiscal year 2019 had a cost of $7,900. b. The cost of expired insurance for the fiscal year is $10,600. c. Annual depreciation on equipment is $7,000. d. The April utilities expense of $800 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded. e. The company’s employees have earned $2,000 of accrued and unpaid wages at fiscal year-end. f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000. g. Additional property taxes of $550 have been assessed for this fiscal year but have not been paid or recorded in the accounts. h. The $300 accrued interest for April on the long-term notes payable has not yet been paid or recorded. 2. Using information…arrow_forwardAdjustment for Depreciation of Asset On December 1, delivery equipment was purchased for $7,200. The delivery equipment has an estimated useful life of four years (48 months) and no salvage value. Using the straight-line depreciation method, analyze the necessary adjusting entry as of December 31 (one month) using T accounts, and then formally enter this adjustment in the general journal.arrow_forwardCorrecting Journal Entries for Errors The following are independent errors: a. In January 2019, repair costs of $11,160 were debited to the Machinery account. At the beginning of 2019, the book value of the machinery was $114,600. No residual value is expected, the remaining estimated life is 10 years, and straight-line depreciation is used. b. All purchases of materials for construction contracts still in progress have been immediately expensed. It is discovered that the use of these materials was $9,750 during 2018 and $12,360 during 2019. c. Depreciation on manufacturing equipment has been excluded from manufacturing costs and treated as a period expense. During 2019, $53,800 of depreciation was accounted for in that manner. Production was 13,200 units during 2019, of which 3,036 remained in inventory at the end of the year. Assume there was no inventory at the beginning of 2019. Required: Prepare journal entries for the preceding errors discovered during 2020.…arrow_forward
- Required: 1. Prepare general journal entries to record the preceding transactions. 2. Post to general ledger T-accounts. 3. Prepare a year-end trial balance on a worksheet and complete the worksheet using the following information: (a) accrued salaries at year-end total $1,000. (b) for simplicity, the building and equipment are being depreciated using the straight- line method over an estimated life of 20 years with no residual value. (c) supplies on hand at the end of the year total $600. (d) bad debts expense for the year totals $610; and (e) the income tax rate is 30%; income taxes are payable in the first quarter of 2017.arrow_forwarda. Unrecorded depreclation on the trucks at the end of the year is $9,054. b. The total amount of accrued Interest expense at year-end is $8.000. c. The cost of unused office supplies still avallable at year-end is $1,500. 1. Use the above Information about the company's adjustments to complete a 10-column work sheet. 2a. Prepare the year-end closing entries for Dylan Delivery Company as of December 31. 2b. Determine the capital amount to be reported on the December 31, balance sheet. Note: S. Dylan, Capital was $129,560 on December 31 of the prior year. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Use the above information about the company's adjustments to complete a 10-column work sheet. DYLAN DELIVERY COMPANY Work Sheet For Year Ended December 31 Adjusted Trial Balance Balance Sheet and Statement of Owner's Equity Unadjusted Trial Balance Adjustments Income Statement Account Title Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cash 16,500 S 17,500 17,500…arrow_forwardThe trial balance for Harris Pitch and Putt on June 30 is as follows: Data for month-end adjustments are as follows: a. Expired or used-up insurance, 380. b. Depreciation expense on equipment, 1,950. c. Depreciation expense on repair equipment, 1,650. d. Wages accrued or earned since the last payday, 585 (owed and to be paid on the next payday). e. Supplies remaining at end of month, 120. Required 1. Complete a work sheet for the month. (Skip this step if using CLGL.) 2. Journalize the adjusting entries. 3. If using CLGL, prepare an adjusted trial balance. 4. Prepare an income statement, a statement of owners equity, and a balance sheet. Assume that no additional investments were made during June. If you are using CLGL, use the year 2020 when recording transactions.arrow_forward
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