Financial Accountings

CH 2 Instructions: Review the following example adjusting entries. Each example is independent. Then, complete the exercise that follows. Accrual Entries - Recorded BEFORE cash is exchanged Sales on Account 1) 11/15- Provided services to customers for $2,000 on account. 2) 12/20- Collected $1,800 from customers who owe on account. Accrued Wages 1) 12/31 - Accrued $3,000 of wages to be paid on 1/1. 2) 1/1- Paid Wages. Deferral Entries - Recorded AFTER cash is exchanged Purchase and adjust Supplies 1) 8/1- Used cash to purchase $300 of Supplies. 2) 8/31- Counted $225 supplies remaining. ( 300225=75 used) Purchase and adjust insurance 1) 1/1- Pay $2,400 to purchase a 1 year insurance policy. Unearned Revenue 1) 9/1 - Received a $600 cash advance for a 6 month revenue contract. 2) 9/30 - Earned 1 month of the revenue contract. ( $600/6=$100 month) Other Adjusting Entries- Depreciation Straight-Line Depreciation Formula = Cost Salvage Value / Useful life 1) 8/1- Used cash to purchase an Auto to be used in the business- Cost: $800, Salvage Value $200, Useful Life: 5 years. CH 2 Instructions: Review the following example adjusting entries. Each example is independent. Then, complete the exercise that follows. Accrual Entries - Recorded BEFORE cash is exchanged Sales on Account 1) 11/15- Provided services to customers for $2,000 on account. 2) 12/20- Collected $1,800 from customers who owe on account. Accrued Wages 1) 12/31 - Accrued $3,000 of wages to be paid on 1/1. 2) 1/1- Paid Wages. Deferral Entries - Recorded AFTER cash is exchanged Purchase and adjust Supplies 1) 8/1- Used cash to purchase $300 of Supplies. 2) 8/31- Counted $225 supplies remaining. ( 300225=75 used) Purchase and adjust insurance 1) 1/1- Pay $2,400 to purchase a 1 year insurance policy. Unearned Revenue 1) 9/1 - Received a $600 cash advance for a 6 month revenue contract. 2) 9/30 - Earned 1 month of the revenue contract. ( $600/6=$100 month) Other Adjusting Entries- Depreciation Straight-Line Depreciation Formula = Cost Salvage Value / Useful life 1) 8/1- Used cash to purchase an Auto to be used in the business- Cost: $800, Salvage Value $200, Useful Life: 5 years