Adjusted Trial Balance Flashcards
Describe the nature and purpose of an adjusted trial balance
Define
Adjusted trial balance
Adjusting the Accounts
Is the primary basis for the preparation of financial statements because the accounts now contain all data needed for financial statements.
Adjusting the Accounts
Purpose
Adjusted trial balance
Adjusting the Accounts
The purpose of an adjusted trial balance is to prove the equality of the total debit balances and the total credit balances in the ledger after all adjustments.
It shows the balances of all accounts, including those adjusted, at the end of the accounting period.
Adjusting the Accounts
Determine the net income for the quarter April 1 to June 30
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Adjusting the Accounts
Determine the total assets and total liabilities at June 30, 2022
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Adjusting the Accounts
Determine the amount of owner’s capital at June 30, 2022
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Adjusting the Accounts
Fill in the blank
___ become expired costs either through the passage of time (e.g. insurance) or through consumption (e.g., advertising supplies)
Adjusting the Accounts
prepaid expenses
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make the adjustment
If at the time of purchase the company expects to consume the supplies before the next financial statement date, …
Adjusting the Accounts
It may choose to debit (increase) an expense account rather than an asset account.
Adjusting the Accounts
Concept
Is the primary basis for the preparation of financial statements because the accounts now contain all data needed fro financial statements.
Adjusting the Accounts
Adjusted Trial Balance
Adjusting the Accounts
Concept
It shows the balances of all accounts, including those adjusted, at the end of the accounting period.
Adjusting the Accounts
Adjusted Trial Balance
Adjusting the Accounts
When?
Unearned revenues are recognized as revenue …
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at the time services are performed
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Fill in the blank
Company may ___ ( ) a revenue account when they receive cash for future services.
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credit (increase)
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Explain why each account may need adjustment
Supplies
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to recognize supplies used during the period.
Explain why each account may need adjustment
Unearned Service Revenue
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to record revenue generated for services performed
Explain why each account may need adjustment
Salaries and Wages Payable
Adjusting the Accounts
to recognize salaries and wages accrued to employees at the end of a reporting period
Adjusting the Accounts
Prepare the following accrued adjusting entries at December 31
- Services performed but not recorded are $4,200.
- Utility expenses incurred but not paid are $660.
- Salaries and wages earned by employees of $3,000 are unpaid.
Adjusting the Accounts
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Enumerate the type of adjustment and related account
Accounts Receivable
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Type of Adjustment: Accrued Revenue
Related Account: Service Revenue
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Enumerate the type of adjustment and related account
Supplies
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Type of Adjustment: Prepaid Expense
Related Account: Supplies Expense
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Enumerate the type of adjustment and related account
Prepaid Insurance
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Type of Adjustment: Prepaid Expense
Related Account: Insurance Expense
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Enumerate the type of adjustment and related account
Interest Payable
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Type of Adjustment: Accrued Expense
Related Account: Interest Expense
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Enumerate the type of adjustment and related account
Unearned Service Revenue
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Type of Adjustment: Unearned Revenue
Related Account: Service Revenue
Adjusting the Accounts
Prepare a correct income statement for July 2022
The income statement of Venden Co. for the month of July Prepare correct income statement. shows net income of $4,000 based on Service Revenue $8,700, Salaries and Wages Expense $2,500,
Supplies Expense $1,700, and Utilities Expense $500. In reviewing the statement, you discover the following.
- Insurance expired during July of $700 was omitted.
- Supplies expense includes $250 of supplies that are still on hand at July 31. 3.
- Depreciation on equipment of $300 was omitted.
- Accrued but unpaid wages at July 31 of $400 were not included.
- Services performed but unrecorded totaled $650.
Adjusting the Accounts
Revenues:
* Service revenue ($8,700+$650)
Expenses:
Salaries and wages expense ($2,500+$400)
Supplies expenses ($1,700-$250)
Utilities expense $500
Insurance expense $700
Depreciation expense $300
Net income: $9,350-$5,850 = $3,500
Adjusting the Accounts
