GT ACCT 2101 - Accrual Accounting and Adjusting Entries
School name Georgia Tech
Pages 15

Unformatted text preview:

Slide 1Cash Basis versus Accrual BasisThe Accounting CycleTypes of Adjusting Journal EntriesAphrodite Spas Trial Balance June 30, 20XXLet’s PracticeLet’s PracticeSlide 8Slide 9Journal Entries General LedgerAphrodite Spas Adjusted Trial Balance June 30, 20XXAphrodite Spas Income Statement For the Month Ended 6/30/XXAphrodite Spas Classified Balance Sheet 6/30/XXClosing EntriesAphrodite Spas Post-Closing Trial Balance June 30, 20XXAccrual Accounting and Adjusting Journal EntriesLinda MullinsAssociate Professor of AccountingGeorgia State University Perimeter CollegeCash Basis versus Accrual BasisCash BasisAccrual Basis•Only records revenues and expenses when cash is exchanged.•Not GAAP (generally accepted accounting principles).•Revenue Recognition Principle–Records revenue when it is earned.•Matching Principle–Records expenses when the cost contributes to the revenue earned.•Requires month-end adjusting journal entries.Prepare a Trial BalanceReady to start recording business transactions for the next accounting period.Journalize Adjusting EntriesPost adjusting journal entries to the General LedgerPrepare a Adjusted Trial BalancePrepare Financial StatementsPrepare a Post-Closing Trial BalanceThe Accounting CycleClose temporary accountsTypes of Adjusting Journal EntriesExpired assets that need to be reduced and recorded as an expense.The adjusting journal entry will ALWAYS include a debit to an expense account and a credit to an asset account.Expired assets that need to be reduced and recorded as an expense.The adjusting journal entry will ALWAYS include a debit to an expense account and a credit to an asset account.Cash received in advance of the performance of a service or delivery of a product. Deposit originally recorded as a liability, but is now revenue.The adjusting journal entry will ALWAYS include a debit to a liability account and a credit to a revenue account.Cash received in advance of the performance of a service or delivery of a product. Deposit originally recorded as a liability, but is now revenue.The adjusting journal entry will ALWAYS include a debit to a liability account and a credit to a revenue account.Performance of a service or delivery of a product without being recorded.The adjusting journal entry will ALWAYS include a debit to an asset account and a credit to a revenue account.Performance of a service or delivery of a product without being recorded.The adjusting journal entry will ALWAYS include a debit to an asset account and a credit to a revenue account.A cost incurred to support revenue that has not been recorded.The adjusting journal entry will ALWAYS include a debit to an expense account and a credit to a liability account.A cost incurred to support revenue that has not been recorded.The adjusting journal entry will ALWAYS include a debit to an expense account and a credit to a liability account.Prepaid ExpensePrepaid ExpenseUnearnedRevenueAccruedRevenueAccruedExpenseAphrodite Spas Trial BalanceJune 30, 20XXAccount Debit CreditCash $45,550Accounts Receivable 4,000Supplies 300Equipment 9,000Accounts Payable 4,650Unearned Spa Revenue 500Common Stock 50,000Dividends 200Spa Revenue 4,900Rent Expense 1,000Totals $60,050 $60,050Let’s Practice•Aphrodite Spas’ adjusting entries for June 20XX are as follows.a. A count of supplies revealed only $75 remained.b. Depreciation on equipment was $150.c. $200 of the unearned revenue has been earned.d. June revenue not recorded totaled $700.e. Receptionist salary of $1,200 need to be accrued.Let’s Practice•Aphrodite Spas’ adjusting entries for June 20XX are as follows.PE A count of supplies revealed only $75 remained.PE Depreciation on equipment was $150.UR $200 of the unearned revenue has been earned.AR June revenue not recorded totaled $700.AE Receptionist salary of $1,200 need to be accrued.Date Account Name Debit CreditGeneral JournalDate Account Name Debit CreditJune 30 Supplies Expense 225 Supplies 225June 30 Depreciation Expense 150 Accumulated Depreciation, Equipment 150June 30 Unearned Spa Revenue 200 Spa Revenue 200June 30 Accounts Receivable 700 Spa Revenue 700June 30 Salaries Expense 1200 Salary Payable 1200General JournalJournal Entries General LedgerCashDR CRBalance 45550Common StockDR CRBalance 50000Accounts ReceivableDR CRBalance 4000June 30 700Balance 4700SuppliesDR CRBalance 300June 30 225Balance 75EquipmentDR CRBalance 9000Accounts PayableDR CRBalance 4650Unearned Spa Revenue DR CRBalance 500June 30 200Balance 300Spa RevenueDR CRBalance 4900June 30 200June 30 700Balance 5800DividendsDR CRBalance 200Rent ExpenseDR CRBalance 1000Accum. Deprec. DR CRJune 30 150Balance 150Salaries PayableDR CRJune 30 1200Balance 1200Supplies ExpenseDR CRJune 30 225Balance 225SalaryExpenseDR CRJune 30 1200Balance 1200DepreciationExpenseDR CRJune 30 150Balance 150Aphrodite Spas Adjusted Trial BalanceJune 30, 20XXAccount Debit CreditCash $45,550Accounts Receivable 4,700Supplies 75Equipment 9,000Accumulated Depreciation 150Accounts Payable 4,650Unearned Spa Revenue 300Salaries Payable 1200Common Stock 50,000Dividends 200Spa Revenue 5800Rent Expense 1,000Supplies Expense 225Depreciation Expense 150Salary Expense 1200Totals $62,100 $62,100ISREBSAphrodite SpasIncome StatementFor the Month Ended 6/30/XXRevenue: Spa Revenue $5,800Expenses: Rent Expense $1,000 Supplies Expense 225 Depreciation Expense 150 Salary Expense 1200Total Expenses 2,575Net Income $3,225Aphrodite SpasRetained Earnings StatementFor the Month Ended 6/30/XXRetained Earnings, 6/1/XX $0Add: Net Income 3,225Subtotal 3,225Less: Dividends 200Retained Earnings, 6/30/XX $3,025Aphrodite Spas Classified Balance Sheet6/30/XXAssetsCurrent Assets Cash $45,550 Accounts Receivable 4,700 Supplies 75Total Current Assets $50,325Plant, Property, and Equipment Equipment 9,000 Less: Accumulated Depreciation, Equipment 150Total Plant, Property, and Equipment 8,850Total Assets $59,175Liabilities and Stockholders’ EquityCurrent Liabilities: Accounts Payable 4,650 Unearned Spa Revenue 300 Salaries Payable 1,200Total Liabilities 6,150Stockholders’ Equity: Common Stock 50,000 Retained Earnings 3,025Total Stockholders’ Equity 53,025Total Liabilities & Stockholders’ Equity $59,175Date Account Name Debit CreditMarch 31 Spa Revenue 5800 Income Summary 580031 Income Summary 2575 Rent Expense 1,000 Supplies Expense 225 Depreciation


View Full Document

GT ACCT 2101 - Accrual Accounting and Adjusting Entries

Download Accrual Accounting and Adjusting Entries
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Accrual Accounting and Adjusting Entries and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Accrual Accounting and Adjusting Entries 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?