Each of the following independent events requires a year-end adjusting entry. Show how each event and its related adjusting entry affect the accounting equation. Assume a December 31 closing date. The first event is recorded as an example. Do not round intermediate calculations & round your final answer to the nearest whole dollar.
a. Paid $6,600 cash in advance on October 1 for a one-year insurance policy.
b. Received a $5,400 cash advance for a contract to provide services in the future. The contract required a one-year commitment, starting April 1.
c. Purchased $2,100 of supplies on account. At year's end, $265 of supplies remained on-hand.
d. Paid $11,760 cash in advance on August 1 for a one-year lease on office space.
The Accounting Equation
Event/ Total Assets = Liabilities = Stockholders Equity
Adjustment
Cash + Other Assets Common Stock + Retained Earnings
a. (6,600)+ (6,600) = + +
a. Adj. + (1,650) = + + (1,650)
b. + = + +
b. Adj. + = + +
c + = + +
c. Adj. + = + +
d. + = + +
d. Adj. + = + +
Answers: 2
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Each of the following independent events requires a year-end adjusting entry. Show how each event an...
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