会计英语unit5-Completion-of-the-Accounting-Cycle.ppt

单击此处编辑母版标题样式,单击此处编辑母版文本样式,第二级,第三级,第四级,第五级,*,*,*,Unit 5 Completion of the Accounting Cycle,.Adjusting Entries,.Closing Entries,.Adjusted Trial Balance,1,1.Analyzing,transactions,Accounting Cycle,2.Making,journals,3.Preparing,ledgers,4.Trial,balance,5.Adjusting,&closing,6.Adjusted,trial balance,7.Financial,statement,Accounting,Cycle,2,.Adjusting Entries,Adjusting entries are journal entries which are classified as either prepayments or accruals.,Adjusting entries are needed because they assign revenues to the period when they are earned and expenses to the period when they are incurred.,With adjusting entries,related asset and liability accounts balances are corrected under the concept of accrual-basis.,3,Prepayments,Prepaid expenses,Unearned revenues,Adjustment,Accrued revenues Accrued expenses,Accruals,4,Type of adjustment,Accounts before adjustment,Adjusting entry,Prepaid expenses,Asset overstated,Expenses understated,Dr.Expenses,Cr.Assets,Unearned revenues,Liabilities overstated,Revenues understated,Dr.Liabilities,Cr.Revenues,Accrued revenues,Assets understated,Revenues understated,Dr.Assets,Cr.Revenues,Accrued expenses,Expenses understated,Liabilities understated,Dr.Expenses,Cr.Liabilities,6,1.Prepaid Expenses,Payments of expenses that will benefit more than one accounting period are called,prepaid expenses,.,Common prepayments are insurance,taxes,rents,and depreciation,etc.,7,An,asset account,is increased to show the benefit that will be received in the future,When expenses are paid,At the end of each accounting period,Apportion,is needed to record the expenses that occurred in the current period.,8,Example(1)Prepaid Insurance,Target paid a$1,200 for a 3-month insurance.,Dr.Prepaid Insurance 1,200,Cr.Cash 1,200,When expenses are paid,At the end of the month,Dr.Insurance Expense 400,Cr.Prepaid Insurance 400,10,Example(2)Supplies,Target purchases supplies costing$5,000.,When supplies are purchased,By the end of the month,a count of the inventory shows that$2,500 of the supplies has been used up.,Dr.Supplies 5,000,Cr.Cash 5,000,Dr.Supplies Expense 2,500,Cr.Supplies 2,500,At the end of the month,11,A company buys a piece of equipment for$1 million and expects it to have a useful life for 10 years.,Example(3)Depreciation,When equipment are purchased,Dr.Equipment 1,000,000,Cr.Cash 1,000,000,At the end of the year,Dr.Depreciation Expense 100,000,Cr.Accumulated Depreciation 100,000,13,Adjustment for unearned revenues,Liability Revenues,Overstated Balance,Adjusting Entry(-),Adjusting Entry(+),15,Example unearned revenues,Sears Corporation receives$4,000 for services in advance supposed to be completed in 4 month.,When payment is received,Dr.Cash 4,000,Cr.Unearned Revenue 4,000,At the end of month,Dr.Unearned Revenue 1,000,Cr.Service Revenue 1,000,16,Adjustment for Accrued Revenues,Assets Revenues,Understated Balance,Adjusting Entry(+),Adjusting Entry(+),18,Example,Sears Corporation performed service for revenue fee for$300 which would not be received until later.,When revenue is earned,Dr.Account Receivable 300,Cr.Service Revenue 300,When cash is received,Dr.Cash 300,Cr.Account Receivable 300,19,4.Accrued Expenses,Expenses incurred but not yet paid or recorded are called accrued expenses.,For example:interest,taxes and salaries,20,Adjustment for accrued expenses,Expenses Liabilities,Understated Balance,Adjusting Entry(+),Adjusting Entry(+),21,Example(1)Accrued Interest,Sears Corporation signed a three-month notes payable in the amount of$10,000 in October 1.The note requires interest at an annual rate of 12%.,The amount of interest accumulation is determined by three factors:,Interest=Face Value of Note x Annual Interest Rate x Time in Terms of One Year,22,Example(2)Accrued Salaries,Sears has accrued salaries to pay at the end of month$2,000.,Adjusting entry:,Dr.Salaries Expense 2,000,Cr.Salaries Payable 2,000,24,.Closing Entries,Closing involves closing temporary accounts and transferring the data to an account called,Income Summary,.,Income Summary is a non-financial statement account used only to facilitate the closing process.,25,Real accounts/Permanent accounts:,Their balances are carried from period to period.,For example:Asset,Liability and Owners equity.,Nominal accounts/Temporary accounts:,At the end of the accounting year,their balances will be transferred to Income Summary,ie to be closed.,For example:Revenue and Expense.,26,Example,Current accounts show National City has the following revenues and expenses information:,Revenues:$35,000,Expenses for the period:salary$900,advertising$5,000,depreciation$5,000,interest$200,Dividend for the period$1,000.,28,1.To close revenues and expenses into income summary.,Dr.Revenue 35,000,Cr.Income Summary 35,000,Dr.Income Summary 11,100,Cr.Salaries Expense 900,Advertising Expense 5,000,Depreciation Expense 5,000,Interest Expense 200,29,.Adjusted Trial Balance,Adjusting trial balance should be in perfect balance based on which financial statements are prepared.,31,Accounts Title,Balance,Cash,7,050,Office supplies,Prepaid rent,800,2,000,Paid-in Capital,10,000,Withdrawals,50,Sales revenue,1,500,Telephone expense,100,Salary expense,1,500,Total,11,500,11,500,Balance sheet,Income statement,Sonya Pharmacy,Trial BalanceDecember 31,2009,32,Case,Missy Real Estate has the following transactions information in August,2007:,1.On August 31 2007,the company owed$900 in salaries to its employees which will not be paid till September 2007.,2.On August 1,the company borrowed$48,000 from the bank on a 10 year mortgage.The annual interest rate is 10%.,3.Revenues earned but unrecorded for August totaled$1,300.,Requirements:Prepare the adjusting entries needed on August 31,2007.,33,Solution,1.Dr.Salaries Expense 900,Cr.Salaries Payable 900,2.Dr.Interest Expense 400,Cr.Interest Payable 400,3.Dr.Account receivable 1,300,Cr.Service Revenue 1,300,34,Summary,.Adjusting Entries,1.Prepayments:,Prepaid expenses&unearned revenues,2.Accruals:,Accrued revenues&Accrued expenses,.Closing Entries,.Adjusted Trial Balance,35,Type of adjustment,Accounts before adjustment,Adjusting entry,Prepaid expenses,Asset overstated,Expenses understated,Dr.Expenses,Cr.Assets,Unearned revenues,Liabilities overstated,Revenues understated,Dr.Liabilities,Cr.Revenues,Accrued revenues,Assets understated,Revenues understated,Dr.Assets,Cr.Revenues,Accrued expenses,Expenses understated,Liabilities understated,Dr.Expenses,Cr.Liabilities,36,