Planning Adjusting Entries on a Worksheet Chapter 6, Section 2

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

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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

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

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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

Proving the Adjustments column of the Worksheet

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3. Rule double lines.

1. Rule a single line.

2. Add both the Adjustments Debit and Credit columns.

3

Assignments

Work Together 6-2 (Textbook pg. 161)

On Your Own 6-2 (Textbook pg. 161)

Application 6-2 (Textbook pg. 172)