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Adjustingentryresultsin expenserecorded before

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Unformatted text preview: Revenues” Adjusting Entries for “Accrued Revenues” Revenues earned but not yet received in cash or recorded. Adjusting entry results in: Revenue Recorded BEFORE Accrued revenues often occur in regard to: rent interest services performed 30 Cash Receipt Adjusting Entries for “Accrued Expenses” Adjusting Entries for “Accrued Expenses” Expenses incurred but not yet paid in cash or recorded. Adjusting entry results in: Expense Recorded BEFORE Accrued expenses often occur in regard to: rent interest taxes 31 salaries bad debts* Cash Payment, if any* 5. Adjusted Trial Balance 5. Adjusted Trial Balance Illustration 3-33 Shows the balance of all accounts, after adjusting entries, at the end of the accounting period. 32 6. Preparing Financial Statements 6. Preparing Financial Statements Financial Statements are prepared directly from the Adjusted Trial Financial Statements are prepared directly from the Adjusted Trial Balance. Balance. Income Statement 33 Statement of Retained Earnings Balance Sheet 6. Preparing Financial Statements 6. Preparing Financial Statements Illustration 3-34 34 6. Preparing Financial Statements 6. Preparing Financial Statements Illustration 3-35 35 LO 6 7. Closing Entries 7. Closing Entries To reduce the balance of the income statement (revenue and expense) accounts to zero. To transfer net income or net loss to owner’s equity. Balance sheet (asset, liability, and equity) accounts are not closed. Dividends are closed directly to the Retained Earnings account. 36 7. Closing Entries 7. Closing Entries Illustration 3-33 Closing Journal Entries: Retained earnings Dividends 5,000 Service revenue 5,000 106,000 Salaries expense 46,000 Advertising expense 15,000 Rent expense 9,000 Insurance expense 500 Interest expense 500 Depreciation expense 400 Bad debt expense Retained earnings 37 1,600 33,000 7.. Closing 7. Closing 7 7. Entries Entries Entries Entries Illustration 3-37 38 LO 7 Prepare closing entries. 8. Post-Closing Trial Balance 8. Post-Closin...
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