ACC 221 1st Edition Lecture 10 Outline of Previous Lecture Chapters 5 6 7 Review Adjusting Entries Accounts Closing revenue and expense accounts o Closing accounts o Closing process o Other closing information Outline of Current Lecture Chapters 7 8 Additional Adjusting Entries Accrued Liabilities o Recording entries even if you have not paid Unearned Revenue Accounts o Someone pays us in advanced for work o Additional Applications Accrued Assets o People have not paid us for services completed Current 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 account o Dr Wages Expense Equity o Cr Wages Payable Liability if wages were already paid you would Cr Cash rather than wages payable o 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 cash o Dr Wages Payable o Cr Cash These 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 Accounts o 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 account o Dr Cash Cr Unearned Revenue Paying off unearned revenue as customer s payment each month o Dr Unearned Revenue Cr Service Revenue o Only current month s service o Slowly shift unearned to service revenue o Additional Applications Buying season tickets Magazine subscriptions Accrued Assets o 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 system o Dr Accounts Receivable Cr Service Revenue Customer paying off accrued assets o Dr Cash Cr Accounts Receivable More likely in interest than emergency services
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