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MU ACC 221 - Additional Adjusting Entries
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ACC 221 1st Edition Lecture 10 Outline of Previous Lecture- Chapters 5, 6, & 7: Review Adjusting Entries & Accounts Closing revenue and expense accountso Closing accountso Closing processo Other closing informationOutline of Current Lecture - Chapters 7 & 8: Additional Adjusting Entries Accrued Liabilitieso Recording entries even if you have not paid Unearned Revenue Accountso Someone pays us in advanced for worko Additional Applications Accrued Assetso People have not paid us for services completedCurrent Lecture- Chapters 7 & 8: Additional Adjusting Entries Accrued Liabilities o Accrued Liabilities - Recording entries even if you have not paid Wages:- If paying workers on 29th of month, must also include pay for 30th and 31st, even if you plan to include the days in next month’s wage pay- Put this in the liabilities accounto Dr. Wages Expense (Equity)o Cr. Wages Payable (Liability); if wages were already paid, you would Cr. Cash, rather than wages payableo Workers have a right to this money, you owe them for the two days they have worked and not been paid. Now show all wages for accounting period Paying off wages payable- Get rid of liability, pay off with casho Dr. Wages Payableo Cr. CashThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Errors if forget to adjust- Expenses underrepresented- Net income, profit, assets overrepresented Unearned Revenue Accountso Unearned Revenue Accounts - Someone pays us in advanced for work Pay multiple months in advanced; profitable for us: earn interest, have the cash, do not have to bill Have not yet earned the cash received- Liability – unearned revenue, customer has right to assets, as they must receive service, or contract is void and money must be returned Must have place to put extra money that is not for the current month- When getting money in advanced, put in new permanent accounto Dr. Cash, Cr. Unearned Revenue- Paying off unearned revenue as customer’s payment each montho Dr. Unearned Revenue, Cr. Service Revenueo Only current month’s serviceo Slowly shift unearned to service revenueo Additional Applications Buying season tickets Magazine subscriptions Accrued Assetso Accrued Assets - People have not yet paid us for services completed Different from people paying on credit- Those are planned for, these are not—person has not been billed yet, last minute adjustments at end of the cycle- Putting accrued assets into systemo Dr. Accounts Receivable, Cr. Service Revenue- Customer paying off accrued assetso Dr. Cash, Cr. Accounts Receivable- More likely in interest, than emergency


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MU ACC 221 - Additional Adjusting Entries

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