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311-Ch04Outlilne(5th) - CHAPTER 4 ADJUSTMENTS FINANCIAL...

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CHAPTER 4 - ADJUSTMENTS, FINANCIAL STATEMENTS, and the QUALITY of EARNINGS The Accounting Cycle The Unadjusted Trial Balance Adjusting Entries Adjustments - Deferrals 1. The company performed $1,000 additional services in December for customers who had previously paid the company. Date/Ref Account Debit Credit UNEARNED REVENUE $1,000 REVENUE $1,000 2. Prepaid Expenses includes $4,000 for insurance coverage over four years, which was paid on July 1. Date/Ref Account Debit Credit INSURANCE EXP $500 PREPAID EXP $500 Adjustments - Accruals 3. On December 31, the company physically counted $130,000 in inventory, but the Inventory account reported a balance of $170,000. Date/Ref Account Debit Credit COGS $40,000 INVENTORY $40,000 4. The Unadjusted Trial Balance indicates that Property and Equipment has an historical cost of $338,000 at the end of the year and Accumulated Depreciation of $83,000 - the used-up portion of the historical cost prior to this year. The depreciation is estimated to be $30,000 per year.
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