Adjusting Account

1. Institute of Information Technology
Professionalism Excellence Respect

2. by Group-3

3. Arif Ibne Ali – BIT0308
Nadia Nahar – BIT0327
Anirudhya Robi – BIT0333
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4. Timing Issues
• Fiscal and calendar years
• Accrual- vs. cash-basis
accounting
• Recognizing revenues and
expenses
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5. 11/18/2014 5

6. Time Period
Assumption
Revenue Recognition
Principle
Expense Recognition
Revenue and
Expense Recognition
Principle
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7. 11/18/2014 7

8. Deferrals
Prepaid
Expenses
Unearned
Revenues
Accrued
Revenues
Accrued
Expenses
Accruals
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9. Unadjusted
Balance
Credit
Adjusting
Entry (-)
Debit
Adjusting
Entry (+)
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10. Unadjusted
Balance
Debit
Adjusting
Entry (-)
Credit
Adjusting
Entry (+)
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11. Credit
Adjusting
Entry (+)
Debit
Adjusting
Entry (+)
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12. Credit
Adjusting
Entry (+)
Debit
Adjusting
Entry (+)
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13. 11/18/2014 13

14. Dr. Cr.
.
Unearned Service Revenue 800
Salaries and Wages Payable 1,200
Dr. Cr.
Owner’s Capital 10,000
Owner’s Drawings 500
Service Revenue 10,600
Salaries and Wages Expense 5,200
Supplies Expense 1,500
Rent Expense 900
Insurance Expense 50
Interest Expense 50
Depreciation Expense 40
Cash $15,200
Accounts Receivable 200
Supplies 1,000
Prepaid Insurance 550
Equipment 5,000
Accumulated Depreciation – Equipment $40
Notes Payable 5,000
Accounts Payable 2,500
Interest Payable 50
$30,190 $30,190
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15. Owner’s Capital, October 1 $ -0-
Add: Investments $10,000
10,000
Net Income 2,860
12,860
Less: Drawings 500
Owner’s Capital, October 31 $12,360
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Revenues
Service Revenue $10,600
Expenses
Salaries and Wages Expense $5,200
Supplies Expense 1,500
Rent Expense 900
Insurance Expense 50
Interest Expense 50
Depreciation Expense 40
Total Expenses 7,740
Net Income $2,860

16. Liabilities
Notes Payable $5,000
Accounts Payable 2,500
Unearned Service Revenue 800
Salaries and Wages Expense 1,200
Interest Payable 50
Total Liabilities 9,550
Owner’s Equity
Owner’s Capital 12,360
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Liabilities and Owner’s Equity
Assets
Cash $15,200
Accounts Receivable 200
Supplies 1,000
Prepaid Insurance 550
Equipment $5,000
Less :Accumulated Depreciation – Equipment 40 4960
Total Assets $21,910
Total Liabilities and Owner’s Equity $21,910

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