Chapter 6
Adjusting Entries
General Journal
Date Account Titles Ref. Debit Credit (a) Cash (+A) 10,000
Common Stock (+SE) 10,000 Stockholder invests into the
business
Assets = Liabilities + SE
Ref. Cash + Supplies + Equip ment = Accounts Payable +
Notes
Payable + Common Stock
(a) +10,000 = +10,000
Step 1: Analyze
transactions and source documents.
Liabilities Equity Assets = +
Step 2: Apply double-entry accounting
(Left side) (Right side) Debit Credit
T- Account
ACCOUNT NAME: ACCOUNT No. Date Description PR Debit Credit Balance
Step 4: Post entry to ledger
GENERAL JOURNAL Page 123
Date Description
Post.
Ref. Debit Credit
Revenues are
recognized when cash is received and
expenses are recorded
when cash is paid.
Non-GAAP
Revenues arerecognized when
earned and expenses
are recognized when
Handout 20
Deferred
+ Cash - Cash Deferred Accrued Now Deferred +/ - Cash Accrued +/ - Cash
Paid (or received) cash before
expense (or revenue) recognized
Paid (or received) cash after
Deferred Unearned Revenue
Deferred Unearned Revenue
Accrued Accrued Revenue
Deferred Unearned Revenue Prepaid Expense
Accrued Accrued Revenue
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.)
Accrued Accrued Revenue
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.) Supplies
Accrued Accrued Revenue
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.) Supplies
Accrued Accrued Revenue
……..Receivable
Chapter 6
Adjusting Entries
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.) Supplies
Accrued Accrued Revenue
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.) Supplies
Accrued Accrued Revenue
……..Receivable Accrued Expense ……..Payable
L
A
A
L
1. Resets revenue,
expense and dividend account balances to zero at the end of the period.
2. Helps summarize a period’s revenues and expenses in the
Income Summary
account.
Identify accounts for closing.
Record and post closing entries.
Temporary Accounts Income Summary Expenses Dividend s Permanent Accounts Liabilities Equity
Close Credit Balances in Revenue
Accounts to Income Summary.
Close Debit Balances in Expense
accounts to Income Summary.
Close Income Summary to
Retained Earnings.
Decorating Revenue 120,400 120,400 Investment Income 1,200 1,200 Income Summary
R
EVENUEA
CCOUNTS TOI
NCOMES
UMMARYIncome Summary
73,110
121,600
48,490
Income Tax Expense
Income Summary
73,110
121,600
48,490
Income Tax Expense
Retained Earnings Income Summary
73,110
121,600
Retained Earnings
Dividends
Retained Earnings
Dividends
750
750
List of permanent accounts and
their balances after posting closing
entries.
response to accrued assets and accrued liabilities that were created by adjusting entries at the end of a reporting period. The purpose of reversing entries is to simplify a company’s recordkeeping.
We will now see how the accounting for our payroll accrual will be handled with and
Deferred Unearned Revenue Prepaid Expense Plants &Equipment (Accumulated Depre.) Supplies
Accrued Accrued Revenue
