Question

Identify two very specific adjusting entries that a company might make at the end of an accounting period. Please explain scenarios that would create the need for the adjusting entries. Use actual numbers and account names in your answer to illustrate the proper way to complete the adjusting entry.

Answer 1

Introduction Adjusting enteries are made in your accounting Jourinals at the end of an accounting Period after a trail balance is Prefaned. Parfore or need for Adjusting Entries To Assign Revenues and expenses to the accounting Period in which they occurred Adjusting entries are made to follow the vadows Accounting Concept 19 matching concept. IN Acccural baseal accounting (ii) Accounting period. Two spectic Adjusting entoles (1) Accurred Expenses & - Accured Expenses are those expense which are due but not paid during the current accountin periodo for example. Let a irm who owes wases to employees at the accounting period end $ 5000, Then , Adjustment entry will be a $ $ Accured wage Ale De Sooo To case Portable Account 5000 -

(2) Prepaid Exfeuses: Prepaid expenses are assets that are paid for and then gradually used during the accounting period For exampler A Company Pay Peut for 2 years $20,000 AL the end of at Ist accounting year' It has to pass an adjustment entry in Prepaid Rent Account Debit 10,000 To Rent Account toooo