Презентация на тему: Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1

Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Review
Homework: recording business transactions
Homework: recording business transactions
Solutions: recording business transactions
Solutions: recording business transactions
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Learning Objectives – Chapter 3
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
What is the Difference between Cash Basis Accounting & Accrual Basis Accounting?
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Review : The Time Period Concept
Review : Revenue Recognition Principle
Review : The Matching Principle
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Part of the Accounting Process
The initial trial balance that comes from the General Ledger is referred to as an Unadjusted Trial Balance. Because of the Time Period Concept, Revenue
For example, the Office Supplies account shows $500 at the end of December. If a count of the actual supplies on hand shows that some supplies have been used,
Adjusting Journal Entries
Adjusting Entry
Journalizing and Posting
Prepaid Rent Example
Prepaid Rent Example
Prepaid Insurance
Prepaid Insurance
Depreciation (plant Assets)
Depreciation (plant Assets)
Depreciation (plant Assets)
Depreciation Example
Depreciation Example
Depreciation Example
Prepaids: common Prepaid Expenses
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Try it Question
Answers
Answers
Answers
Answers
Prepaid Expenses(A) or Expense ?
Unearned Revenue Example
Unearned Revenue Example
Unearned Revenues
Unearned Revenues
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1
1/51
Средняя оценка: 4.9/5 (всего оценок: 16)
Код скопирован в буфер обмена
Скачать (1307 Кб)
1

Первый слайд презентации

Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1

Изображение слайда
2

Слайд 2: Review

2 Review Define and apply Revenue recognition and matching principle Record transactions into journals and post journal entries to the Ledger Accounts Prepare a trial balance Discover errors in recording transactions and correct them. Accounting

Изображение слайда
3

Слайд 3: Homework: recording business transactions

1. April 1, Abdul(owner) starts business as a trader by paying $10,000 into bank account. 2. April 2, Abdul buys a motor vehicle for the business, and pay$2,000. 3. April 3,Abdul buy goods which he will re-sell in the normal course of trade for $3,000. 4. April 4, Abdul sells a quantity of the goods for $800,and pay the money into the bank. 5. April 7, a customer returns some goods and receives a refund of $40. 6. April 8, Abdul return some goods costing $100 to a supplier and receives a refund. 3 Accounting 7. April 10, Abdul buys another motor vehicle for the business and pay $4,000. 8. April 11, Tania lends the business $5,000,Abdul put the money into the bank account. 9. April 12, Abdul pays rent on a warehouse by cheque, $1,000. 10. April 14, Abdul subsets part of the warehouse and receives a cheque for $300 for the rent.this is paid into the bank. 11. April 15, Abdul pays wages by cheque,$1,200. Identifying 11 transactions and Classifying different accounts Recording the transaction into journals Posting into the Ledger accounts

Изображение слайда
4

Слайд 4: Homework: recording business transactions

4 Homework: recording business transactions Accounting 4

Изображение слайда
5

Слайд 5: Solutions: recording business transactions

5 Solutions: recording business transactions Accounting

Изображение слайда
6

Слайд 6: Solutions: recording business transactions

6 Solutions: recording business transactions Accounting

Изображение слайда
7

Слайд 7

A B C D The posting of purchase of office supplies on account for $1,500 will be shown as: Cash Office Supplies Accounts Payable Office Supplies Accounts Receivable Office Supplies Accounts Payable 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Office Supplies 1,500 Multiple Choices 2mins

Изображение слайда
8

Слайд 8

The detailed record of all increases and decreases that have occurred in an individual asset, liability, or equity during a specific period is called a(n): balance sheet. journal. account. trial balance. Multiple Choices 2mins

Изображение слайда
9

Слайд 9

Kevin Copies recorded a cash collection on account by debiting Cash and crediting Accounts Payable. How will this error affect the trial balance? Assets will be understated Liabilities will be overstated Profits will be overstated Equity will be understated Multiple Choices 2mins

Изображение слайда
10

Слайд 10: Learning Objectives – Chapter 3

10 Learning Objectives – Chapter 3 Cash Basis vs Accrual Basis Accounting Apply the time period concept, revenue recognition, and matching principles Explain the purpose of and journalize and post adjusting entries Prepare an adjusted trial balance Identify the impact of adjusting entries on the financial statements use a worksheet to prepare the adjusted trial balance Accounting

Изображение слайда
11

Слайд 11

11 Learning Objective 1 Differentiate between cash basis accounting and accrual basis accounting

Изображение слайда
12

Слайд 12: What is the Difference between Cash Basis Accounting & Accrual Basis Accounting?

CASH BASIS Revenue is recorded when Cash is received Expenses are recorded when Cash is paid Not allowed under GAAP ACCRUAL BASIS Revenue is recorded when it is earned Expenses are recorded when incurred Generally used by larger businesses An Accrual Basis approach recognizes that the recognition of revenues and expenses should not be affected by the timing of cash collections and disbursements. Rather revenues and expenses should be recognized when the underlying economic activities actually take place.

Изображение слайда
13

Слайд 13

13 Learning Objective 2 Define and apply the time period concept, revenue recognition, and matching principles

Изображение слайда
14

Слайд 14: Review : The Time Period Concept

Assumes that a business’s activities can be sliced into small segments and that financial statements can be prepared for specific time periods, such as a month, quarter, or year. Any twelve month period is referred to as a fiscal year. 14 Accounting

Изображение слайда
15

Слайд 15: Review : Revenue Recognition Principle

15 Revenue should be recorded when it is EARNED. A good has been delivered or a service has been performed. The earnings process is complete. (warehouse?) The amount of revenues must represent the actually selling price. If a $200 item is discounted to $100, then the revenue is $100. Accounting

Изображение слайда
16

Слайд 16: Review : The Matching Principle

All expenses are recorded when they are incurred during the period Expenses are matched against the revenues for that period. Eg. Cash sales of $1,000, and suppose these good sold by the company cost $700. Accounting 16

Изображение слайда
17

Слайд 17

17 Learning Objective 3 Explain the purpose of and journalize and post adjusting entries

Изображение слайда
18

Слайд 18: Part of the Accounting Process

© 2k015 Pearson Education, Limited. 4- 18 Analyze & j ournalize transactions  Post journal entries to ledger accounts  Prepare unadjusted trial balance  Journalize and post adjusting entries Start with beginning account balances  Prepare the worksheet (optional)

Изображение слайда
19

Слайд 19: The initial trial balance that comes from the General Ledger is referred to as an Unadjusted Trial Balance. Because of the Time Period Concept, Revenue Recognition Principle, and Matching Principle some adjustments are needed

3- 19 The initial trial balance that comes from the General Ledger is referred to as an Unadjusted Trial Balance. Because of the Time Period Concept, Revenue Recognition Principle, and Matching Principle some adjustments are needed.

Изображение слайда
20

Слайд 20: For example, the Office Supplies account shows $500 at the end of December. If a count of the actual supplies on hand shows that some supplies have been used, we will need to adjust the account

3- 20 Accounting For example, the Office Supplies account shows $500 at the end of December. If a count of the actual supplies on hand shows that some supplies have been used, we will need to adjust the account.

Изображение слайда
21

Слайд 21: Adjusting Journal Entries

Each Adjusting Journal Entry will adjust a balance sheet account and an income statement account. P162-163

Изображение слайда
22

Слайд 22: Adjusting Entry

An adjusting entry is the entry made at the end of accounting period that is used to record revenues to the period in which they are earned and expenses to the period in which they occur. Adjusting entry also update the asset and liability accounts. Adjusting Entry Prepaid (Deferred) expenses * Unearned (Deferred) revenues Accrued expense Accrued revenues * including depreciation Paid (or received) cash before expense (or revenue) recognized Paid (or received) cash after expense (or revenue) recognized Adjustments Accounting 22

Изображение слайда
23

Слайд 23: Journalizing and Posting

23 Accounting

Изображение слайда
24

Слайд 24: Prepaid Rent Example

In Transaction #10 (see Chapter 2), on December 1, Smart Touch Learning prepaid 3 months rent of $3,000 ($1,000 x 3 months). Paying rent in advance gives us the right to use the property for 3 months (in this case). By the end of December, 1/3 of that right has been used. 3- 24 © 2k015 Pearson Education, Limited.

Изображение слайда
25

Слайд 25: Prepaid Rent Example

To adjust the Prepaid Rent account, we need to reduce it by 1/3, and we need to show the rent expense related to the December revenues. 3- 25 © 2k015 Pearson Education, Limited.

Изображение слайда
26

Слайд 26: Prepaid Insurance

On 12/1/2019, FastForward paid $2,400 for insurance for 2-years (24-months, December 2019 through November 2021). FastForward recorded the expenditure as Prepaid Insurance on 12/31/2019. What adjustment is required? Accounting 26

Изображение слайда
27

Слайд 27: Prepaid Insurance

On 12/1/2019, FastForward paid $2,400 for insurance for 2-years (24-months, December 2019 through November 2021). FastForward recorded the expenditure as Prepaid Insurance on 12/31/2019. What adjustment is required? 637 128 Accounting 27

Изображение слайда
28

Слайд 28: Depreciation (plant Assets)

plant assets are long-lived, tangible assets used in the operation of a business. As a business uses these assets, their value and usefulness decline. Plant Assets need to depreciates, such as buildings equipment, furniture, and automobiles. The contra asset account used is Accumulated Depreciation—(asset’s name) Land has an infinite life; Under Generally Accepted Accounting Principles, we never depreciate Land. (p163) Plant assets, with the exception of land, are depreciated over their useful lives. Accounting 28

Изображение слайда
29

Слайд 29: Depreciation (plant Assets)

Depreciation is usually defined as the periodic, systematic allocation of the cost of a long-lived tangible asset to expense over its estimated useful life. The accounts used are: Depreciation Expense(E)-I/S Accumulated Depreciation (-A, contra-asset account )-B/S 3- 29 © 2k015 Pearson Education, Limited. Accumulated Depreciation is a contra-asset. - Has a credit balance - Appears in the Asset section of the Balance Sheet

Изображение слайда
30

Слайд 30: Depreciation (plant Assets)

Straight-Line Depreciation Expense = Asset Cost - Residual Value Useful Life Depreciation (plant Assets) Depreciation is the process of allocating the cost of a plant asset over its useful life in a systematic and rational manner. Straight-line Method: a depreciation method that allocates an equal amount of depreciation each year. Accounting 30 Residual Value ( salvage value) is the amount we expect to receive for the asset when we dispose of it at the end of its useful life.

Изображение слайда
31

Слайд 31: Depreciation Example

Assume that, on December 2, Smart Touch Learning received a contribution of furniture with a market value of $18,000 from Sheena Bright. At the end of December, Smart Touch Learning will need to record depreciation for the use of the furniture, assuming it has a 5 year useful life. 3- 31 © 2k015 Pearson Education, Limited.

Изображение слайда
32

Слайд 32: Depreciation Example

Using the straight-line method of computing depreciation, Smart Touch Learning will need to record $300 of depreciation for December. 3- 32 © 2k015 Pearson Education, Limited.

Изображение слайда
33

Слайд 33: Depreciation Example

Recording the entry requires the use of two accounts: Depreciation Expense and Accumulated Depreciation. 3- 33 © 2k015 Pearson Education, Limited.

Изображение слайда
34

Слайд 34: Prepaids: common Prepaid Expenses

Prepaid Insurance Prepaid rent Depreciation (plant Assets) Office supplies used

Изображение слайда
35

Слайд 35

NetSolutions estimates the depreciation on its office equipment to be $50 for the month of December. 16 17 18 19 Accumulated Depreciation — Office Equipment 50 00 Dec. 31 50 19 Depreciation Expense Dec. 31 50 Accumulated Depreciation — Office Equipment 19 53 53 Depreciation Expense 50 00 Dec. 31 Accounting 35

Изображение слайда
36

Слайд 36

NetSolutions ’ balance sheet would show the office equipment at cost, less the accumulated depreciation. Office equipment $1,800 Less accumulated depreciation 50 $1,750 Book value Accounting 36

Изображение слайда
37

Слайд 37

Fitness First has a new client who prepays $600 for a package of six training sessions. Fitness First had provided four training sessions as of year end. Which of the following amounts should Fitness First report on its income statement? Service Revenue of $400 Service Revenue of $600 Unearned service revenue of $400 Unearned service revenue of $600 Multiple Choices 2mins

Изображение слайда
38

Слайд 38: Try it Question

Journalizing and posting the adjusting entries of Smart Touch Learning. a. Prepaid rent expired, $1000 b. Supplies used, $400 c. Depreciation on furniture, $300 d. on July 1, purchased a building with $180,000. At the end of December, record depreciation for the use of the building, assuming it has a 60 years useful life, and no residual value at the end of its life… Accounting 38

Изображение слайда
39

Слайд 39: Answers

a. Prepaid rent expired, $1,000 Answers Date Accounts and Explanation Debit Credit b. Dec. 31 Rent Expense 1,000 Prepaid Rent 1,000 To record rent expense. Rent Expense a. Prepaid rent 1,000 Prepaid Rent Bal. 1,200 Rent exp 1,000 a. 3- 39

Изображение слайда
40

Слайд 40: Answers

b. Supplies used, $400 Answers Date Accounts and Explanation Debit Credit Dec. 31 Supplies Expense 400 Office Supplies 400 To record office supplies used. Office Supplies Bal. 4,000 Supplies exp 400 b. Supplies Expense b. Office supplies 400 3- 40

Изображение слайда
41

Слайд 41: Answers

c. Depreciation on furniture, $300 Answers Date Accounts and Explanation Debit Credit c. Dec. 31 Depreciation Expense—Furniture 300 Accumulated Depreciation—Furniture 300 To record depreciation on furniture. Depreciation Expense—Furniture c. Accumulated depreciation 300 Accumulated Depreciation—Furniture 14,000 Bal. depreciation Exp 300 c. 3- 41

Изображение слайда
42

Слайд 42: Answers

d. On July 1, purchased a building with $180,000. At the end of this year, record depreciation for the use of the building, assuming it has a 60 years useful life, and no residual value at the end of its life… Answers Date Accounts and Explanation Debit Credit c. Dec. 31 Depreciation Expense—building 1500 Accumulated Depreciation—building 1500 To record depreciation on building. Depreciation Expense—Furniture c. 1500 Depreciation Expense—Furniture 0 Bal. 1,500 c. Straight-Line Depreciation = ( Cost - Residual Value ) ÷Useful Life = ( $180,000 - $0 ) ÷ 60 Years = 3,000 this year depreciation exp = 3,000 ÷ 6/12 = 1,500

Изображение слайда
43

Слайд 43: Prepaid Expenses(A) or Expense ?

Other prepaid expenses, such as Prepaid Rent, are accounted for exactly as Insurance and Supplies. We should note that some prepaid expenses are both paid for and fully used up within a single period. For example, a company may pay monthly rent on the first day of each month. This payment creates a prepaid expense on the first day of the month that fully expires by the end of the month. In these special cases, we can record the cash paid with a debit to the expense account instead of an asset account. Accounting 43

Изображение слайда
44

Слайд 44: Unearned Revenue Example

On December 21, a law firm engages Smart Touch Learning to provide e-learning services for the next 30 days, paying $600 in advance. 3- 44 © 2k015 Pearson Education, Limited.

Изображение слайда
45

Слайд 45: Unearned Revenue Example

Smart Touch Learning is obligated to perform the services. During the last 10 days of the month, 1/3 of the services are performed. 3- 45 © 2k015 Pearson Education, Limited.

Изображение слайда
46

Слайд 46: Unearned Revenues

On December 26, 2009, FastForward agrees to provide consulting services to a client for a fixed fee of $3,000 for 60 days. On this date, the client pays the entire consulting fee in advance. FastForward makes the following entry: Accounting 46

Изображение слайда
47

Слайд 47: Unearned Revenues

On December 26, 2009, FastForward agrees to provide consulting services to a client for a fixed fee of $3,000 for 60 days. On this date, the client pays the entire consulting fee in advance. FastForward makes the following entry: Accounting 47

Изображение слайда
48

Слайд 48

On December 31, earns some of the 5-days of consulting fees. Each day that passes results in consulting fees of $50 ($3,000 ÷ 60). Unearned Revenues Accounting 48

Изображение слайда
49

Слайд 49

Unearned revenue is essentially a(n): net income. net loss. liability. asset. Multiple Choices 2mins

Изображение слайда
50

Слайд 50

Which of the following are the two basic categories of adjusting entries? Net income and net loss Expenses and revenues Prepaids and accruals Cash and noncash Multiple Choices 2mins

Изображение слайда
51

Последний слайд презентации: Adjusting Entries Horngren’s Accounting Lecture Six Lisa, Li 1

51 Keep up the good work ! C U next Tuesday!

Изображение слайда