completed a job on credit for $15,000 Learning Objective 3: Make adjusting entries Accrual-basis accounting requires adjusting entries at the end of the period in order to produce correct balances for the financial statements 1. Assign revenues to the period in which they are earned 2. Assign expenses to the period in which they are incurred 3. Update the asset and liability accounts Five Categories of Adjusting Entries
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Chapter 2-1 The Account Record increases and decreases in a specific asset, liability or equity item Debit = “Left” Credit = “Right” Account Name T-Account form Debit / Dr. Credit / Cr. Chapter 2-2 Debits and Credits Double-entry system Dual effect of transaction Each transaction MUST affect 2 or more accounts to keep the basic accounting equation balance DEBIT = CREDIT for each transaction Chapter 2-3 Summary of Debit/Credit Rules Debits > Credits → Debit balance
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PROJECT GOAL The goal of this graded project is to create the following financial statements for J & L Accounting, Inc.: ■ Balance sheet ■ Income statement ■ Statement of retained earnings ■ Post-closing trial balance The financial statements must be created in one Microsoft Word document (.doc or .docx file). Alternatively, an Excel workbook may be used (.xls or .xlsx file). The Word or Excel file will be uploaded for grading. INSTRUCTIONS Read the following instructions thoroughly before
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sales, expenses, wages, purchases, and receivables. These transactions are maintained in various journals and ledgers and tell the financial story of the business. The process of maintaining this financial story is called the Accounting Cycle. Evaluation There are ten steps involved in completing the accounting cycle. They are as follows: “(1) Transactions are analyzed and recorded in the journal. (2) Transactions are posted to the ledger. (3) An unadjusted trial balance is prepared. (4)
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principal and interest at 5% are due in one year; and (3) equipment costing $73,000 was purchased at the beginning of the year for cash. | Prepare journal entries for each of the above transactions. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) | Transaction | General Journal | Debit | Credit | 1 | Prepaid insurance | 25,000 | | | Cash | | 25,000 | | | | | 2 | Note receivable |
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response.) General Journal Merchandise inventory payable lAccounts Debit l,:J l Credit | 21,000 *****-**r*i i {"?1,oqa (Omitthe "$" sign in your record the cashpayment. for 1(b)Prepare entries that the buyershould response.) General Journal *- Debit Credit lAccil *;-i"*"t"il I M"'"h;;.ld I Cash *" lLiulil f)?;ooDl420 f ;t58r Debit Credit (Omitthe "$" sign in your response.) Prepare record thesale. for 2(a) entries theseller that should General Journal lAccountsreceivable
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information. The FASB issued the following guideline for recognizing revenue: "Revenue is recognized when it is realized or realizable and it is earned" (Siegel, Levine, Qureshi, & Shim, 2001). Analysis and Journalizing Many businesses use a double-entry system that is a method that records every action with a debit and a credit. In order to make both sides of an accounting equation equal, the corporation must figure how an action will affect both sides of the equation. Credit items display the result
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000.00 | 29,750.40 | 4958.45 | 312,331.33 | 12/31/2008 | 36,000.00 | 27,046.80 | 4507.85 | 307,823.48 | 12/31/2009 | 36,000.00 | 24,588.00 | 4098.04 | 303,725.44 | 12/31/2010 | 36,000.00 | 22,352.40 | 3725.44 | 300,000.00 | | | | | | Journal entries Purchase of Bond 1/1/2006 Purchase of 12% Bond 300,000.00 Loss on purchase of bond 22,744.44 Cash 322,744.44 To record interest and bond premium amortization 12/31/2006 Interest revenue 30,545.34 Bond premium 5,454.66 Cash 36,000
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every desk and chair. Each account, usually abbreviated а/с, frequently has its own page in the organization's ledger. Double-entry: A method of bookkeeping in which the twofold effect of every entry is recorded, thus requiring two entries to record each transaction. By recording both effects of each transaction, this system offers protection against error. Single-entry: Any bookkeeping system that does not include the complete results of each transaction. It is usually used by small companies or
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IMPORTANCE OF ADJUSTMENT ENTRIES Importance of Adjustment Entries Jourdain M. Yardan American Intercontinental University IMPORTANCE OF ADJUSTMENT ENTRIES ABSTRACT Adjustment entries are made to handle issues that occur from events that directly affect expenses and revenue for accounting periods. The four types of accounting entries are accrued revenues, unearned revenues, accrued expenses, and
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