Effect of adjusting entries on the accounting equation

Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date. The first event is recorded as an example.

a. Paid $7,200 cash in advance on April 1 for a one-year insurance policy.
b. Purchased $1,400 of supplies on account. At year’s end, $150 of supplies remained on hand.
c. Paid $8,400 cash in advance on March 1 for a one-year lease on office space.
d. Received a $18,000 cash advance for a contract to provide services in the future. The contract required a one-year commitment starting September 1 to be provided evenly over the year.
e. Paid $24,000 cash in advance on October 1 for a one-year lease on officespace.

  • CreatedMay 19, 2012
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