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Planning Adjusting Entries on a Worksheet Chapter 6, Section 2.

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Presentation on theme: "Planning Adjusting Entries on a Worksheet Chapter 6, Section 2."— Presentation transcript:

1 Planning Adjusting Entries on a Worksheet Chapter 6, Section 2

2 Adjustments  Changes to update general ledger accounts  CONCEPT: Matching Expenses with Revenue  Expenses incurred to earn revenue are reported in the same fiscal period as the revenue is earned and reported.  Worksheet is used to plan adjustments

3 Supplies Adjustment  Up to this point, we have only recorded the purchases of new supplies.  We must bring the asset and expense accounts up-to-date to reflect supplies used.  Example:  Supplies account balance = $4,751.00  Actual supplies on hand = $2,187.00  Subtract these two numbers to determine amount of adjustment.  $4,751.00 – 2,187.00 = $2,564.00  Debit Supplies Expense; Credit Supplies for the amount of the adjustment

4 Recording the Supplies Adjustment on the Worksheet 1 2 3.Label the two parts of this adjustment with a small letter a in parentheses, (a). 1. Write the debit amount. 2.Write the credit amount. 3

5 Insurance Adjustment  We must bring the asset and expense accounts up-to-date to reflect insurance used.  Example:  Prepaid Insurance account balance = $1,200.00  Value of Insurance = $1,100.00  Subtract these two numbers to determine amount of adjustment.  $1,200.00 – 1,100.00 = $100.00  Debit Insurance Expense; Credit Prepaid Insurance for the amount of the adjustment

6 Recording the Insurance Adjustment on the Worksheet 1 2 3.Label the two parts of this adjustment with a small letter b in parentheses, (b). 1. Write the debit amount. 2.Write the credit amount. 3

7 Proving the Adjustments column of the Worksheet 1 2 3.Rule double lines. 1. Rule a single line. 2.Add both the Adjustments Debit and Credit columns. 3

8 Assignments  Work Together 6-2 (Textbook pg. 161)  On Your Own 6-2 (Textbook pg. 161)  Application 6-2 (Textbook pg. 172)


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