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© 2014 Cengage Learning. All Rights Reserved. Learning Objectives © 2014 Cengage Learning. All Rights Reserved. LO3 Adjust merchandise inventory. LO4 Adjust interest receivable.
© 2014 Cengage Learning. All Rights Reserved. Recording an Adjusting Entry for Merchandise Inventory ●The amount of inventory on hand at the beginning of a fiscal period is called beginning inventory. ●During the period, merchandise is purchased and merchandise is sold. ●To determine how much merchandise remains in inventory at the end of the period, a physical inventory is conducted. ●The actual count of merchandise at the end of a fiscal period is called ending inventory. SLIDE 2 LO3 Lesson 15-2
© 2014 Cengage Learning. All Rights Reserved. Recording an Adjusting Entry for Merchandise Inventory (if Mdse. Inventory decreased) SLIDE 3 LO3 Lesson 15-2 Adj.5, Dec. 31 Bal. 108, (New Bal.102,838.00) Merchandise Inventory Income Summary Adj.5, Debit Income Summary 1 1 Credit Merchandise Inventory 2 2
© 2014 Cengage Learning. All Rights Reserved. Journalizing the Adjusting Entry for Interest Receivable ●Interest earned but not yet received is called accrued interest income. SLIDE 4 LO3 Lesson 15-2
© 2014 Cengage Learning. All Rights Reserved. Adj Interest Expense Journalizing the Adjusting Entry for Interest Receivable SLIDE 5 LO3 Lesson 15-2 Debit Interest Receivable 1 1 Credit Interest Income 2 2 Interest Income Dec. 31 Bal New Bal (New Bal )
© 2014 Cengage Learning. All Rights Reserved. Lesson 15-2 Audit Your Understanding 1.How is the amount of merchandise inventory on hand at the end of the fiscal year determined? SLIDE 6 ANSWER Lesson 15-2
© 2014 Cengage Learning. All Rights Reserved. Lesson 15-2 Audit Your Understanding 2.What adjusting entry is recorded when the ending merchandise inventory is greater than the beginning value? SLIDE 7 ANSWER Lesson 15-2
© 2014 Cengage Learning. All Rights Reserved. Lesson 15-2 Audit Your Understanding 3.How often is revenue earned on an outstanding note receivable? SLIDE 8 ANSWER Lesson 15-2
© 2014 Cengage Learning. All Rights Reserved. Lesson 15-2 Audit Your Understanding 4.What types of accounts are increased by recording an adjusting entry for accrued revenue? SLIDE 9 ANSWER Lesson 15-2
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