lesson fa-10-020-03 financial accounting...
TRANSCRIPT
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 1 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
Lesson FA-10-020-03
Financial Accounting Fundamentals -
The Accounting Cycle and
Adjusting Journal Entries
Part 3
This workbook contains notes and worksheets
to accompany the corresponding video lesson
available online at:
Permission is granted for educators and students to
make copies and redistribute this document without fee
provided the copyright notice and page footer is retained.
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by the copyright holder.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 2 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
Financial Accounting Fundamentals – – The Accounting Cycle
and Adjusting Journal Entries – Part 3
[Clip 22] Comprehensive Problem 1 - January 20x0 - Adjusting Entries -
Malorie Stylists
This part of our lesson includes journalizing some practice adjusting entries for
Malorie Stylists at January 31, 20x0, followed by an adjusted trial balance.
We will use the results of these exercises as a starting point for the lesson on
financial statements. We have 8 adjusting entries at January 31 for you to
journalize and post. Some are similar to those we looked at earlier. Others will
require some creative thinking on your part.
Comprehensive Problem 1 – Malorie Stylists
Adjusting Entries
1. Jan. 2 – Contracted with a famous actress to provide weekly styling and spa treatments
for a fixed fee of $800 monthly, billable monthly. On January 31, accrued revenue for
January from this contract.
2. Jan. 31 – Accrued one month’s interest expense on $5,000, 12%, 6-month note.
3. Jan. 31 – Adjusting entry for one month of $900 six-month deferred insurance expired.
4. Jan. 31 – Adjusting entry for one-month’s rent of $1,500 three-month prepaid rent.
5. Jan. 31 – Adjusting entry for one-month’s subscription expense on $480 two-year
subscriptions.
6. Jan. 31 – $100 in supplies were unused at the end of January. Adjusting entry for $100
in supplies unused.
7. Jan. 31 – Adjusting entry for deferred revenue from a famous actor in the amount of
$1000.
8. Jan. 31 – Malorie determined that the legal fees expense of $1,200 should be allocated
over each of the 12 months in the year. Adjusting entry to reflect one-month’s legal
fees expense for January.
Instructions: Prepare the adjusting journal entries and adjusted trial balance for January 20x0.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 3 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
Comprehensive Problem 1 – Malorie Stylists
Adjusting Entries
Instructions:
For each situation,
1. Analyze the situation
2. Determine which accounts are affected
3. Analyze the effect on the accounting equation
4. Write the journal entry in good form
5. Post the journal entry to t-accounts
6. Write the adjusting entry in the adjusted trial balance worksheet
After all situations are journalized and posted, complete the adjusted trial
balance.
In practice, professional accountants usually write their adjusting entries in the
adjusted trial balance worksheet first, then journalize the entries, then post them
to t-accounts.
Since this video is intended to show you how to solve situations involving accruals
and deferrals, it is more logical for us to write the adjusting entries in the general
journal first.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 4 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
As an aid for these problems, you will find the following in the workbook that
accompanies this lesson:
1. A list of common accounts in the chart of accounts
2. The expanded accounting equation with debit and credit guidelines
3. General journal
4. T-accounts with titles and balances from lesson FA-10-010 (part 3)
5. A completed trial balance from lesson FA-10-010 (part 3)
6. An adjusted trial balance worksheet
Refer to Appendix 2 for an Enlarged Chart
Refer to Appendix 2 for an Enlarged Chart
Refer to Appendix 2 for an Enlarged Chart
Refer to Appendix 2 for an Enlarged Chart
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 5 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
Refer to Appendix 2 for an Enlarged Chart
Refer to Appendix 2 for an Enlarged Chart
Refer to Appendix 2 for an Enlarged Chart
This lesson is designed so that you can watch a video clip explaining each adjusting
entry.
You can either work through the lesson by watching each video clip, then solving
the situation on your own before I show you the solution… I will give a moment to
press pause on the video before I show the solution...
Or, you can work through the lesson by analyzing and journalizing all 8 situations,
check your answers in the workbook, and then watch the video clip if you need an
explanation.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 6 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 23] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #1 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 - Adjusting Entry #1 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
1. Jan. 2 – Contracted with a famous actress to provide weekly styling and
spa treatments for a fixed fee of $800 monthly, billable monthly. On
January 31, accrued revenue for January from this contract.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
[Clip 24] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #2 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 - Adjusting Entry #2 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
2. Jan. 31 – Accrued one month’s interest expense on $5,000, 12%, 6-month
note.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 7 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 25] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #3 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #3 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
3. Jan. 31 – Adjusting entry for one month of $900 six-month deferred
insurance expired.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
[Clip 26] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #4 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #4 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
4. Jan. 31 – Adjusting entry for one-month’s rent of $1,500 three-month
prepaid rent.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 8 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 27] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #5 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #5 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
5. Jan. 31 – Adjusting entry for one-month’s subscription expense on $480
two-year subscriptions.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
[Clip 28] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #6 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #6 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
6. Jan. 31 – $100 in supplies were unused at the end of January. Adjusting
entry for $100 in supplies unused.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 9 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 29] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #7 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #7 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
7. Jan. 31 – Adjusting entry for deferred revenue from a famous actor in the
amount of $1000.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
[Clip 30] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #8 -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusting Entry #8 - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
8. Jan. 31 – Malorie determined that the legal fees expense of $1,200 should
be allocated over each of the 12 months in the year. Adjusting entry to
reflect one-month’s legal fees expense for January.
General Journal
Date Description Debit Credit
Instructions: Write the journal entry and post to the t-accounts.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 10 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 31] Comprehensive Problem 1 - January 20x0 – Adjusted Trial Balance -
Malorie Stylists
Comprehensive Problem 1 - January 20x0 – Adjusted Trial Balance - Malorie
Stylists (see Appendix 1 for the Solution; see Appendix 2 for the Charts and Worksheets)
Instructions: Determine the balance of each t-account and prepare the trial
balance.
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 11 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
APPENDIX 1 - SOLUTIONS
[Clip 23] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #1 - Malorie Stylists
SOLUTION:
[Clip 24] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #2 - Malorie Stylists
SOLUTION:
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 12 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 25] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #3 - Malorie Stylists
SOLUTION:
[Clip 26] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #4 - Malorie Stylists
SOLUTION:
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 13 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 27] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #5 - Malorie Stylists
SOLUTION:
[Clip 28] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #6 - Malorie Stylists
SOLUTION:
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 14 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 29] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #7 - Malorie Stylists
SOLUTION:
[Clip 30] Comprehensive Problem 1 - January 20x0 - Adjusting Entry #8 - Malorie Stylists
SOLUTION:
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
_____________________________________________________________________________________________ Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 15 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
[Clip 31] Comprehensive Problem 1 - January 20x0 – Adjusted Trial Balance - Malorie Stylists
SOLUTION:
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 16 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
APPENDIX 2 – CHARTS AND WORKSHEETS
CHARTS 1, 2, 3
REFER TO NICHOLE HEALTH SERVICES ILLUSTRATION PROBLEM
(see part 2 for those charts)
CHART 4
COMMON ACCOUNTS IN THE CHART OF ACCOUNTS
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 17 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHART 5
The Expanded Accounting Equation with Debit and Credit Guidelines
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 18 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHART 6 – GENERAL JOURNAL
General Journal
Date Description Debit Credit
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 19 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHARTS 7
REFERS TO NICHOLE HEALTH SERVICES ILLUSTRATION PROBLEM
(see part 2 for this chart)
CHART 8
T-Accounts for Comprehensive Problem 1 – Malorie Stylists
January 31, 20x0
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 20 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 21 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 22 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHART 9
Trial Balance, January 31, 20x0
(Before Adjusting Entries)
Malorie Stylists
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 23 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHART 10
Adjusted Trial Balance Worksheet, January 31, 20x0
Malorie Stylists
File: FA-10-020-03-Workbook.pdf
Title: Financial Acctng Fundamentals – Acctng Cycle and Adjusting Journal Entries – Part 3
Copyright 2011 by Rocky Spears Enterprises LLC, All Rights Reserved Page 24 of 24 videos for this lesson are available at evideolearner.com Revised: 2011-05-24
CHART 11 – BLANK T-ACCOUNTS
T-Accounts Worksheet