Planning Adjusting Entries on a Worksheet Chapter 6, Section 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

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

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

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

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

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

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