1) If there was no original entry, adjust the accounts to reflect the revenue EARNED and not recorded or the expense INCURRED and not recorded ACCRUAL OF A REVENUE: An example of an adjusting entry to accrue revenue with NO original journal entry involved would be: Accounts receivable XXXX Sales revenue XXXX There was NO arginal entry made to show service performed for a client on Wednesday the last day of the month Therefore we must record the revenue EARNED in this time period. ACCRUAL OF AN EXPENSE: # An example of an adjusting entry to accrue expense with NO original journal entry involved would be: Interest expense XXXX Interest payable XXXX NO original entry was made for interest owed this month therefore we must record the expense INCURRED In this Aime period to generate revenue 21 there was an original entry then determine what the original entry was and then make the adjustment to properly show revenue EARNED or expense INCURRED this time period based upon the original entry. DEFERAL OF UNEARNED REVENUE: ORIGINAL ENTRY: xxxx Unearned revenue XXXX ADJUSTING ENTRY: Uneamed revenue XXXX Service revenue XXXX In ORIGINAL ENTRY Company recorded receipt of 6 months revenue paid in advance. When one month of rovenue was EARNED the above adjusting entry would be made. DEFERAL OF A PREPAID EXPENSE ORIGINAL ENTRY: Prepaid insurance XXXX Cash XXXX ADJUSTING ENTRY: Insurance expense XXXX Prepaid insurance XXXX In ORIGINAL ENTRY Company paid insurance in advance for 24 months. Each month as the amount of insurance I USED up the company will need to record expense via the above adjusting entry. Cash CLOSING ENTRIES Service Revenue 1,000 Income Summary 1.000 Entry to close revenue and reduce it to zero) Indo Income Summary: Income Summary 600 Salaries Expense 400 Utilities Expense 200 Entry to close expenses and reduce them to zero) into Income Summary Income Summary 400 Retained Eamings 400 Entry to close me balance of income Summary and reduce if to zeroj into Rotained Earings. NOTE: This entry would be reversed there was a not loss. Retained Eamings 50 Dividends 50 Entry to close Dividends and reduce I to zero) dirocky into Retained Eamings. EP #3-1 ACE opened an office on August 1. Prepare adjusting entries on August 31 for ACE (area to show calculations). During August ACE performed services for patients who had medical insurance. At August 31, $816 of such services was earned but not yet biled to the insurance companies. Utility expenses incurred but not paid prior to August 31 totaled $624. ACE Purchased X-Ray equipment on August 1 for $96,000. paying $24,000. in cash and signing a $72,000. 3-year note payable. (Interest is paid each December 31. The equipment depreciates $480 per month.) a) Prepare the adjusting entry for the August depreciation on the X-Ray equipment. b) Prepare the adjusting entry to accrue interest on the nate payable. Interest is $600 per month and paid each December 31. ACE purchased a 1-year malpractice insurance policy on August 1 for $21,800. (The original entry was a debit to Prepaid Insurance and a credit to Cash.) During Augus! ACE purchased $2,100 of medical supplies. At Aug. 31 it was determined that $420 of supplies were still on hand. Type EP 13-2 Missouri State Lodge opened on April 1. Here is its trial balance before adjustment on April 30. Normal Financial of Acet Debit Account Title Statement Credit Cash 1,500 Prepaid Insurance 1,080 Supplies 1,560 Land 9,000 Lodge 42,000 Furniture 10.080 Accounts Payable 2,820 Uneamed Rent Revenue 1,90 Mortgage Payable 21,600 Common Stock (1.000 Shares) 36,000 Dividends 500 Rent Revenue 5,900 Salaries & Wages Expense 1,800 Ualities Expense 480 Advertising Expense 300 SER 300 SE 300 HINT: You might have to add additional accounts that are not yet listed on the April 30 trial balance above. 1) Insurance expires at the rate of $180 per month 2) An inventory of supplies shows $810 of unused supplies on April 30. 3) Annual depreciation is $2,160 on the lodge and $1,800 on furniture. 4) The mortgage interest rate is 9%. (The mortgage was taken out on April 1) 5) Unearned rent of $900 has been earned. 6) Salaries of $450 are accrued and unpaid at April 30