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Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7 th Edition 1 Chapter 8 Completing the Accounting Cycle 8

### Transcript of Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7 th Edition1 Chapter 8 Completing the...

Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition1

Chapter 8Completing the Accounting Cycle

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Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition2

Adjusting Entries and the Worksheet

This tutorial guides you through creating a worksheet and using it to record adjusting entries.

For more detailed instructions, refer to Section 8.2 of the Accounting 1 textbook.

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Adjusting Entries and the Worksheet

Chapter 8 – Completing the Accounting Cycle | Accounting 1, 7th Edition4

Adjusting Entries and the Worksheet

Record the header in the familiar “who, what, when” format: ?

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Adjusting Entries and the Worksheet

List all accounts in order (?), just as you would on a trial balance.

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Adjusting Entries and the Worksheet

Enter the ? and ? balances of each ledger account, and ? and ? the trial balance.

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Adjusting Entries and the Worksheet

Some amounts on the trial balance are out of date.

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Adjusting Entries and the Worksheet

The Supplies account has a balance of \$1480.90.

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Adjusting Entries and the Worksheet

The Supplies account should have a balance of \$526.00, based on supplies that were used up during the year.

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Adjusting Entries and the Worksheet

The required adjustment is \$?

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Adjusting Entries and the Worksheet

The amount of supplies used up is an ? (an income statement account).

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Adjusting Entries and the Worksheet

The amount of supplies used up is the ? (an income statement account).

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Adjusting Entries and the Worksheet

The Worksheet must incorporate these differences.

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Adjusting Entries and the Worksheet

The Worksheet must incorporate these differences. This is the first adjustment, so it is labelled as 1.

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Adjusting Entries and the Worksheet

There are other adjustments required before the trial balance is up to date.

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Adjusting Entries and the Worksheet

The Prepaid Insurance account has a balance of \$6564.00.

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Adjusting Entries and the Worksheet

The Prepaid Insurance account should have a balance of \$4070.00, based on insurance that was used up during the year.

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Adjusting Entries and the Worksheet

The required adjustment is \$?

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Adjusting Entries and the Worksheet

The amount of insurance used up is an ? (an income statement account).

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Adjusting Entries and the Worksheet

The amount of insurance used up is the ? (an income statement account).

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Adjusting Entries and the Worksheet

The Worksheet must incorporate these differences.

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Adjusting Entries and the Worksheet

The Worksheet must incorporate these differences. This is the second adjustment, so it is labelled as 2.

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Adjusting Entries and the Worksheet

Late arriving invoices need to be included.

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Adjusting Entries and the Worksheet

Late arriving invoices need to be included. The total of the late invoices is a credit to ? (new amounts owed).

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Late Arriving Invoices.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Late Arriving Invoices.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Late Arriving Invoices.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Late Arriving Invoices.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Late Arriving Invoices.

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Adjusting Entries and the Worksheet

Unearned revenue needs to be included.

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Adjusting Entries and the Worksheet

Unearned revenue needs to be included. Unearned revenue is a credit to the Unearned Revenue account.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Unearned Revenue.

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Adjusting Entries and the Worksheet

The Worksheet showing adjustments for Unearned Revenue.

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Adjusting Entries and the Worksheet

Once all adjustments have been made, ?

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Adjusting Entries and the Worksheet

Next, transfer ? column. Be sure to account for any adjustments.

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Adjusting Entries and the Worksheet

Transfer all Income ? Be sure to account for any adjustments.

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Adjusting Entries and the Worksheet

? the Income Statement and Balance Sheet columns.

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Adjusting Entries and the Worksheet

Calculate the Net Income (?). Net Income goes in the outer of the last four columns.

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Adjusting Entries and the Worksheet

Rule and total the last four columns of the Worksheet.

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Adjusting Entries and the Worksheet

In the case of a Net Loss, the net loss amounts would go in the inner of the last four columns.

If a company has a net loss, it means expenses are greater than revenues. The net loss amounts need to go in the inner of the last four columns, or the Worksheet will not balance.