Ch04+-+Adjusting+Entries

Ch04+-+Adjusting+Entries - Chapter 4 Adjustments, Financial...

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Chapter 4 – Adjustments, Financial Statements and the Closing Process The Accounting Cycle The Unadjusted Trial Balance Adjusting Journal Entries The Adjusted Trial Balance Preparing the Financial Statements The Closing Process 4-1
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The Accounting Cycle 1. Business transaction occurs 2. Receive or prepare source documents 8. Prepare an adjusted trial balance 9. Prepare financial statements 10. Journalize and post closing entries 11. Prepare a post-closing trial balance 4. Journalize the transactions (Journal) 3. Transaction analysis 5. Post to the General Ledger. 6. Prepare an unadjusted trial balance 7. Journalize and post adjusting entries 4-2
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The Unadjusted Trial Bala nce A listing of individual accounts, usually in financial statement order. Ending debit or credit balances are listed in two separate columns. The purpose of the unadjusted trial balance is to insure that total debits = total credits. 4-3
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Comptime Trial Balance As of September 30, 2010 Account Unadjusted TB Adjustments Adjusted TB Title Debit Credit Debit Credit Debit Credit Cash 14,800 Accounts receivable 2,500 Interest receivable Prepaid insurance 4,800 Supplies 1,600 Inventory 2,400 Equipment 6,000 Accum dep - Equip Account payable 1,600 Interest payable Unearned svc rev 9,000 Note payable 5,000 Common stock 15,000 Retained earnings Dividends 500 Service revenue 4,700 Sales revenue 2,500 Interest revenue Cost of sales 1,200 Salary exp 3,000 Rent exp 800 Insurance exp Supplies exp Interest expense Advertising exp 200 Depreciation exp Total 37,800 37,800 Note that total debits = total credits 4-4
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If total debits do not do not equal total credits on the trial balance, errors have occurred . . . in preparing balanced journal entries. in posting the correct dollar amounts of a transaction. in copying ending balances
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Ch04+-+Adjusting+Entries - Chapter 4 Adjustments, Financial...

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