— Paul pays his $1,000 January rent in December. — Paul’s December electric bill was $200 and is due January 15th. — Paul’s leasehold improvementdepreciationis $2,000 for the year. — On December 31, a customer prepays Paul for guitar lessons for the next 6 months. ...
The following adjusting entry is made to convert prepaid rent for the month of December into an expense: 5. The original cost of the company’s equipment was $10,000, with an estimated 10-year life. Depreciation is recorded annually with the straight-line method, so on December 31st, the...
An adjusting journal entry involves anincome statementaccount (revenue or expense) along with abalance sheetaccount (asset or liability). It typically relates to the balance sheet accounts for accumulated depreciation,allowance for doubtful accounts,accrued expenses,accrued income,prepaid expenses,deferred ...
When expenses are prepaid, a debit asset account is created together with the cash payment. The adjusting entry is made when the goods or services are actually consumed, which recognizes the expense and the consumption of the asset. Prepaid insurance premiums and rent are two common examples of ...
∙Prepaid Rent ∙Supplies 1st journal entry (normal): 2nd journal entry (adjusting): Dr. an asset account and cr. Cash. Dr. an expense account and cr. the asset account for the amount used during that period. The Cash account is used in the original normal journal entry, but ...
Under the accrual basis, the rent income above should already be recognized because it has already been earned even if it has not yet been collected. The adjusting journal entry would be:Dec31 Rent Receivable 2,000.00 Rent Income 2,000.00Example 2: ABC Company lent $9,000 at 10% ...
【财务会计】Chapter3ADJUSTINGTHEACCOUNTS Chapter3-1 StudyObjectives 1.Explainthetimeperiodassumption.2.Explaintheaccrualbasisofaccounting.3.Explainthereasonsforadjustingentries.4.Identifythemajortypesofadjustingentries.5.Prepareadjustingentriesfordeferrals.6.Prepareadjustingentriesforaccruals.7.Describethenatureand...
What Does an Adjusting Journal Entry Record? Here are the main financial transactions that adjusting journal entries are used to record at the end of a period. Prepaid expenses or unearned revenues– Prepaid expenses are goods or services that have been paid for by a company but have not been...
On December 31, 2021, the end of the accounting period, 1/3 of the rent received has already been earned (prorated over 3 months).We should then record the income through this adjusting entry:Dec31 Unearned Rent Income 20,000.00 Rent Income 20,000.00...
• $3,000 of worth prepaid rent expired during the month of June. Instructions for adjusting entries 1) Record the end of month adjusting entries in the general journal. 2) Post the adjusting entries from the general journal to the general ledger ...