Adjustment 1 Purchased 1000 cups for 100 on 112018 Performed an inventory of

Adjustment 1 purchased 1000 cups for 100 on 112018

This preview shows page 14 - 25 out of 44 pages.

Adjustment #1 Purchased 1,000 cups for $100 on 1/1/2018. Performed an inventory of the cups on 1/31/2018, noting 200 cups are left. What entry should be made on 1/31?
Image of page 14

Subscribe to view the full document.

Adjustment #1 Purchased 1,000 cups for $100 on 1/1/2018. Performed an inventory of the cups on 1/31/2018, noting 200 cups are left. What adjusting entry should be made on 1/31?
Image of page 15
Adjustment #2 – What If? On 12/1/2017 Sky Blue Corp. collected $2,400 rent for the period December 1, 2017, to February 28, 2018. What adjusting entry should be made for the year ended December 31, 2017?
Image of page 16

Subscribe to view the full document.

Adjustment #2 – What If? On 12/1/2017 Sky Blue Corp. collected $2,400 rent for the period December 1, 2017, to February 28, 2018. What adjusting entry should be made for the year ended December 31, 2017? December rent January rent February rent $800 $800 $800 December 1, Unearned $2,400 December 31 Adjustment Needed
Image of page 17
Three months of rent were received on December 1 for $2,400, but one month has now been earned, leaving only two months unearned at December 31. Analyze: Assets = Liabilities + Stockholders’ Equity Summarize - Ledger dr + Unearned Revenue cr - dr + Rent Revenue cr - Record: Adjusting Journal (b)
Image of page 18

Subscribe to view the full document.

Adjustment #3 Depreciation is the process of allocating the cost of buildings, vehicles, and equipment to the accounting periods in which they are used. A contra-account is an account that is an offset to, or reduction of, another account.
Image of page 19
Adjustment #3 What if? The company’s unadjusted trial balance reports vehicles of $40,000 and zero balance in Accumulated Depreciation and Depreciation Expense. Depreciation for the period is estimated to be $10,000. Prepare the adjusting journal entry on 12/31.
Image of page 20

Subscribe to view the full document.

Adjustment #3. What if? The company’s unadjusted trial balance reports vehicles of $40,000 and zero balance in Accumulated Depreciation and Depreciation Expense. Depreciation for the period is estimated to be $10,000. Prepare the adjusting journal entry on 12/31.
Image of page 21
Additional Comments Adjusting journal entries never involve cash. Adjusting entries always include one balance sheet and one income statement account.
Image of page 22

Subscribe to view the full document.

Revenue Transactions A transaction that involves selling or having sold the Company’s product/service (to a customer) will result in recording revenue at some point. Revenue is earned (fulfilled their promise) now Record revenue – credit Debit is based on when customer paid for the product/service: Past (deferral) = unearned/deferred revenue (liability) Cash = cash Future (accrual) = accounts receivable Revenue was not earned now Record cash received - debit Credit is based on when the Company earns (fulfills their promise) the revenue Revenue to be earned in future = unearned/deferred revenue (liability) Revenue was earned in the past = accounts receivable
Image of page 23
Expense Transactions A transaction that involves the Company getting some product/service (from a vendor) will result in recording expense at some point. Expense is incurred (Company received benefit) now Record expense– debit Credit is based on when Company has paid/will pay for the product/service: Past (deferral) = prepaid (asset) Cash = cash Future (accrual) = account payable Expense was not incurred now Record cash paid - credit Debit is based on when the Company incurs (receives the benefit) the expense
Image of page 24

Subscribe to view the full document.

Image of page 25

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern

Ask Expert Tutors You can ask 0 bonus questions You can ask 0 questions (0 expire soon) You can ask 0 questions (will expire )
Answers in as fast as 15 minutes