Lets record depreciation expense for the year ended

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Let’s record depreciation expense for the year ended December 31, 2011. 2011 Depreciation Expense = $62,000 - $2,000 5 = $12,000 3-11
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Depreciation On January 1, 2011, Barton, Inc. purchased equipment for $62,000 cash. The equipment has an estimated useful life of 5 years and Barton expects to sell the equipment at the end of its life for $2,000 cash. Let’s record depreciation expense for the year ended December 31, 2011. Dec. 31 Depreciation Expense 12,000 Accumulated Depreciation - Equipment 12,000 To record equipment depreciation Accumulated depreciation is a contra asset account. 3-12
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Barton, Inc. Partial Balance Sheet At December 31, 2011 Assets Cash . Equipment 62,000 $ Less: accumulated deprec. (12,000) 50,000 . . Total Assets Depreciation Equipment is shown net of accumulated depreciation. This amount is referred to as the asset’s book value. $ 3-13
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Unearned (Deferred) Revenues Revenue Buy your season tickets for all home basketball games NOW! “Go Big Blue” Cash received in advance of providing products or services. Liability Unadjusted Balance Credit Adjustment Debit Adjustment 3-14
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Unearned (Deferred) Revenues On October 1, 2011, Ox University sold 1,000 season tickets to its 20 home basketball games for $100 each. Ox University makes the following entry: Oct. 1 Cash 100,000 Unearned Revenue 100,000 Basketball revenue received in advance Oct.1 100,000 Unearned Revenue 3-15
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Unearned (Deferred) Revenues On December 31, Ox University has played 10 of its regular home games, winning 2 and losing 8. Dec. 31 Unearned Revenue 50,000 Basketball Revenue 50,000 To recognize 10-games of revenue Dec. 31 50,000 Oct. 1 100,000 Bal. 50,000 Unearned Revenue Dec. 31 50,000 Basketball Revenue 3-16
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We’re about one-half done with this job and want to be paid for our work! Costs incurred in a period that are both unpaid and unrecorded. Accrued Expenses Expense Liability Credit Adjustment Debit Adjustment 3-17
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12/1/11 12/31/11 Year-end Last pay date 12/25/11 Next pay date Record adjusting journal entry. Accrued Expenses Barton, Inc. pays its employees every Friday. Year-end, 12/31/11, falls on a Thursday. As of 12/31/11, the employees have earned salaries of $47,250 for Monday through Thursday. 3-18
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Accrued Expenses Barton, Inc. pays its employees every Friday. Year-end, 12/31/11, falls on a Thursday. As of 12/31/11, the employees have earned salaries of $47,250 for Monday through Thursday. Dec. 31 Salaries Expense 47,250 Salaries Payable 47,250 To accrue 4-days' salary Other salaries 657,500 Dec. 31 47,250 Bal. 704,750 Salaries Expense Dec. 31 47,250 Salaries Payable 3-19
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Accrued Revenues Smith & Jones, CPAs, had $31,200 of work completed but not yet billed to clients. Let’s make the adjusting entry necessary on December 31, 2011, the end of the firm’s fiscal year. Dec. 31 Accounts Receivable 31,200 Service Revenue 31,200 To accrue revenue earned Other receivables 1,325,268 Dec. 31 31,200 Bal. 1,356,468 Accounts Receivable Other revenues 6,589,500 Dec. 31 31,200 Bal . 6,620,700 Service Revenue 3-20
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Type Adjusting Entry Prepaid Dr. Expense Expenses Cr. Asset Unearned Dr. Liability Revenues Cr. Revenue Accrued Dr. Expense Expenses Cr. Liability Accrued Dr. Asset Revenues Cr. Revenue Summary of Adjustments and Financial Statement Links Links to Financial Statements 3-21
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FastForward Trial Balance - December 31, 2011 Adjusted Dr.
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