Review for AC202

Depreciation accruals paid or received cash after

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Unformatted text preview: led to clients. Let’s make completed but not yet billed to clients. Let’s make the adjusting entry necessary on December 31, 2007, the adjusting entry necessary on December 31, 2007, the end of the company’s fiscal year. the end of the company’s fiscal year. Dec. 31 Accounts Receivable Service Revenue Dr. 31,200 Cr. 31,200 To accrue revenue earned Accounts Receivable Other receivables 1,325,268 Dec. 31 31,200 Bal. 1,356,468 Service Revenue Other revenues 6,589,500 Dec. 31 31,200 Bal . 6,620,700 167 Links to Financial Statements Summary of Adjustments and Financial Statement Links Before Adjustment Income Balance Statement Sheet Account Account Type Adjusting Entry Prepaid Asset Expense Dr. Expense Expenses Overstated Understated Cr. Asset Unearned Liability Revenue Dr. Liability Revenues Overstated Understated Cr. Revenue Accrued Liability Expense Dr. Expense Expenses Understated Understated Cr. Liability Accrued Asset Revenue Dr. Asset Revenues Understated Understated Cr. Revenue 168 Adjusted Trial Balance The adjusted trial balance is used to prove the equity of total debit balances and total credit balances after the adjusting entries have been made. Financial statements (except Cash Flow Statement) can be easily prepared from the adjusted trial balance. 169 170 Problem with Accruing Revenues and Expenses Adjustments are made at end of the month Receiving the payment or paying the payment occurs in another month and amounts may have changed 173 Accruing Uncollected Revenue Examples Include: Interest Earned 174 Accruing Uncollected Revenue $170 Interest Revenue Saturday, Jan. 15 Monday, Jan. 31 Tuesday, Feb. 15 On Jan. 31, the bank owes Webb Co. On Jan. 31, the bank owes Webb Co. iinterest of $170. Interest is paid on the 15 th nterest of $170. Interest is paid on the 15 th day of each month. day of each month. 175 Accruing Uncollected Revenue Initially, the revenue is recognized and a Initially, the revenue is recognized and a receivable is created. receivable is created. GENERAL JOURNAL Date Account Titles and Explanation Jan. 31 Interest Receivable Interest Revenue P R Debit Credit 170 170 To recognize interest revenue. 176 Accruing Uncollected Revenue Balance Sheet Balance Sheet Receivable to Receivable to be collected in a be collected in a ffuture period. uture period. Interest Receivable 1/31 170 Income Statement Income Statement Revenue earned Revenue earned tthis period. his period. Interest Revenue 1/31 170 177 Accruing Uncollected Revenue $320 Monthly Interest $170 Interest Revenue Saturday, Jan. 15 $150 Interest Revenue Monday, Jan. 31 Tuesday, Feb. 15 Let’s look at the entry for February 15. Let’s look at the entry for February 15. 178 Accruing Uncollected Revenue The receivable is collected in a future period. The receivable is collected in a future period. $320 Monthly Interest Paid $170 Interest Revenue from Jan $150 Interest Revenue in Feb GENERAL JOURNAL Date Account Titles and Explanation Feb. 15 Cash P R Debit Credi...
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This note was uploaded on 09/29/2013 for the course AC 202 taught by Professor Nancyeverett during the Fall '09 term at Park.

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