Illustration 3 7 illustration 3 8 3 11 posting

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Illustration 3-7 Illustration 3-8
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3-11 Posting – Transferring amounts from journal to ledger. 2. Posting LO 4 Illustration 3-8
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3-12 Trial Balance A list of each account and its balance; used to prove equality of debit and credit balances. 3. Trial Balance LO 4 Illustration 3-19
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3-13 4. Adjusting Entries LO 5 Explain the reasons for preparing adjusting entries. Makes it possible to: u Report on the statement of financial position the appropriate assets, liabilities, and equity at the statement date. u Report on the income statement the proper revenues and expenses for the period. Revenues are recorded in the period in which they are earned. Expenses are recognized in the period in which they are incurred.
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3-14 Types of Adjusting Entries 1. Prepaid Expenses. Expenses paid in cash and recorded as assets before they are used or consumed. Prepayments 3. Accrued Revenues. Revenues earned but not yet received in cash or recorded. 4. Accrued Expenses. Expenses incurred but not yet paid in cash or recorded. 2. Unearned Revenues. Revenues received in cash and recorded as liabilities before they are earned. Accruals LO 5 Explain the reasons for preparing adjusting entries. Illustration 3-20
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3-15 Adjusting Entries for Deferrals Deferrals are either u prepaid expenses or u unearned revenues. Illustration 3-21 LO 5 Explain the reasons for preparing adjusting entries.
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3-16 Adjusting Entries for “Prepaid Expenses” Payment of cash that is recorded as an asset because service or benefit will be received in the future. u insurance u supplies u advertising Cash Payment Expense Recorded BEFORE LO 5 Explain the reasons for preparing adjusting entries. u rent u buildings and equipment Prepayments often occur in regard to:
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3-17 Supplies. Pioneer purchased advertising supplies costing $25,000 on October 5. Prepare the journal entry to record the purchase of the supplies. Cash 25,000 Supplies 25,000 Oct. 5 Debit Credit Supplies 25,000 25,000 Debit Credit Cash Adjusting Entries for “Prepaid Expenses” LO 5 Explain the reasons for preparing adjusting entries.
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3-18 Supplies. An inventory count at the close of business on October 31 reveals that $10,000 of the advertising supplies are still on hand. Supplies 15,000 Supplies expense 15,000 Oct. 31 Debit Credit Supplies 25,000 15,000 Debit Credit Supplies Expense 15,000 Adjusting Entries for “Prepaid Expenses” 10,000 LO 5 Explain the reasons for preparing adjusting entries.
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3-19 Statement Presentation: Supplies identifies that portion of the asset’s cost that will provide future economic benefit. Adjusting Entries for “Prepaid Expenses” Illustration 3-35 Illustration 3-35
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3-20 Statement Presentation: Supplies expense identifies that portion of the asset’s cost that expired in October. Illustration 3-35 Adjusting Entries for “Prepaid Expenses” LO 5 Explain the reasons for preparing adjusting entries.
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3-21 Insurance. On Oct. 4th, Pioneer paid $6,000 for a one-year fire insurance policy, beginning October 1. Show the entry to record the purchase of the insurance.
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  • Spring '08
  • JCEasterwood
  • Income Statement, Generally Accepted Accounting Principles, Double-entry bookkeeping system, Pioneer

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