Ask Question
14 January, 03:15

Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date. The first event is recorded as an example. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.)

1. Paid $6,300 cash in advance on April 1 for a one-year insurance policy.

2. Received a $15,300 cash advance for a contract to provide services in the future. The contract required a one-year commitment starting September 1.

3. Purchased $1,750 of supplies on account. At year's end, $130 of supplies remained on hand.

4. Paid $6,300 cash in advance on March 1 for a one-year lease on office space.

+2
Answers (1)
  1. 14 January, 03:40
    0
    1. Prepaid insurance (Dr.) $6,300

    Cash (Cr.) $6,300

    2. Cash (Dr.) $15,300

    Unearned Income (Cr.) $15,300

    3. Purchases (Dr.) $1,750

    Accounts payable (Cr.) $1,750

    Cost of Goods Sold (Dr.) $1,620

    Ending Inventory (Dr.) $130

    Purchases (Cr.) $1,750

    4. Prepaid office rent (Dr.) $6,300

    Cash (Cr.) $6,300

    Explanation:

    The adjusting entry is a journal entry recorded at end of accounting period to adjust events or transactions to comply with the accrual concept.

    The closing entries are journal entries required to close a transaction or event in the period. The purpose is to follow matching concept of accounting.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers