125%- View Zoom Basic journal entries O 2 E Add Category Posting to ledger and TB D Insert T Table Chart Text Shape Media Comment Adjusting journal entries H As discussed in class, at the end of each account period you will need to record various adjustments to the financial statements. This includes: M N Jo Update A Some acco availabla um 1. Recording a portion of expenses that were previously booked as an asset (deferral) based on the passage of time or the usage of the asset (Debit Expense, Credit Prepaid Asset) 41A. In the case of Property and Equipment, we have the special case where we use an accumulated depreciation account >> Debit Depreciation Expense, credit Accumulated Depreciation 52. Recording revenue that was previously deferred as a lability that has now been eamed (Debit Uneamed Revenue, Credit Revenue). 3. Accruing revenue for amounts that have been eamed from customers but that have not yet been paid (Debit Accounts Receivable, Credit Revenue) 74. And finally, we have the very common case of needing to record expenses at the end of a period that have been incurred but not yet paid/recorded (Debit Expense, Credit Accrued Exper The following problems should help you practice for what you will see on the test related to these types of transactions 10 11 Problem 1-For entry A, record the original prepaid expense; for entry B, record the expense that would be recorded at the end of the period. 12 13 On June 30, Link Corp pays cash for a 1-year insurance policy in the amount of $24,000 14 15 Entry A>> Record the entry required on June 30, 2019 (Example) 17 Accounts 18 Prepaid Insurance 19 Cash 20 Debit $24,000 Credit $24,000 21 Explanation: to record purchase of 12-month insurance policy 22 23 Entry B>> Record the adjusting entry requried at September 30, 2019 (Example). 24 25 Accounts Ta Hea BE Rows Colun Debit Credit Table 26 Insurance Expense $6,000 27 Prepaid Insurance $6,000 29 Table 29 Explanation: to record 3 months of insurance policy cost ($2000/month times 3 months) 30 31 Out 12 Problem 1A-For entry A, record the original equipment purchase; for entry B, record the expense that would be recorded at the end of the period. 33 34 On June 30, Link Corp purchases equipment on account for $120,000. The equipment has an estimated useful life of 5 years Gridlines 3 36 Entry A>> Record the entry required on June 30, 2019 37 3 Accounts 39 40 41 Explanation Debit Credit Altern Row & Co Height Width 42 Explanation: 43 Entry B >> Record the depreciation expense entry required as of December 31, 2019 (assume no previous depreciation recorded +5 4 Accounts 47 48 Debit Credit 10 Explanation 34 Problem 2-For entry A, record the original cash receipt; for entry B, record the revenue that would have been recorded On June 30, Link Corp receives $100,000 for services to be performed over the next 4 months Entry A>> Record the entry required on June 30, 2019 " Accounts 60 00 Explanation Debit Credit Entry B Assuming that Link will eam this revence evenly over the 4-month period, document the entry to be recorded as of July 31, 2019 Accounts Debit Credit M " ea 20 Explanation 23 28 Problem 3-Record the following accrued revenue-related transactions (note that A and B are unrelelated to one another) 2 On June 30, Link Corp has performed services in the amount of $25,000 No cash has been received for the work to date and no revenue has been recorded 77 38 Entry A Record the entry required on June 30, 2019 39 Accounts Debit Credit Tabs Cotum The Caption Headers & Fa 8W O Rows Columns hele Font Sin Outine b Grid Now & Cotume Explanation Problem 3-Recond the following accrued revenue-related transactions note that A and Bed to one another On June 30, Link Corp has performed services in the amount of $25,000 No cash has been received for this work to date and no revenue has been recorded Entry A Recond the entry required on June 30, 2019 30 Accounts Debit Credit 34 Explanation For Entry B, consider the scenario that Link Receives $40,000 in cash for devices performed but the total amount of service performed for the stomer $50,000 Entry Record the entry required on June 30, 2019 that there are three accounts involved and total debts will be $50 which means that total credits will also be 100 Accounts Debit Credit Explanation Problem 4-Record the following accrued expense-related transaction On June 30, Link Corp owes its employees 55.000 sotal for days that have been worked but that have not yet been paid Entry A Record the entry required on June 30, 2019 10 Accounts Explanation Debit Credit