Winston-Salem/Forsyth County Schools



Accounting I Chapter 18 - Adjusting Entries Name:___________________________

Demonstration Problems

Demo 18-1

Look at the Trial Balance section of the worksheet shown in Figure 18-1 on the classroom screen and on page 519 of your Glencoe Accounting 2007 textbook. This is the partial worksheet for On Your Mark, a merchandising business.

1. What is the balance of the Supplies account? ___________________.

Imagine you are the accountant for On Your Mark and it is the end of the month of December, 2012. The company took an inventory of their supplies on December 31st, and found they now have $1,839 of supplies on hand.

2. How much did the supplies account decrease during the month of December? Write the equation & your answer here:

_________________________________________________________

In adjusting entries at the end of the month of December, Supplies, a permanent asset account, will be decreased by $3,710. Supplies Expense (a temporary account) will be increased by $3,710.

3. Show how this will look in the T-accounts below:

Supplies Supplies Expense

4. Make the appropriate Adjusting entries below: [pic]

Demo 18-2

Look again at the Trial Balance section of the worksheet shown in Figure 18-1 on the classroom screen and on page 519 of your Glencoe Accounting 2007 textbook.

1. What is the balance of the Prepaid insurance account (a permanent asset account)? ___________________

On December 1st, On Your Mark paid $1500 as an annual (yearly) cost for this insurance to protect the company in case customers found any fault with any of On Your Mark's products. Now, on December 31st, On Your Mark has to make an adjusting entry to account for the use of this insurance for one month. How do you think On Your Mark determines what one month of this insurance is worth?

2. Write the equation and your answer here:

Once again, you just performed closing entries for On Your Mark for the month of December, 2012. In adjusting entries at the end of the month of December, Prepaid Insurance, a permanent asset account, will be decreased by $125. Insurance Expense (a temporary account) will be increased by $125.

3. Show how this will look in the T-accounts below:

Prepaid Insurance Insurance Expense

4. Make the appropriate Adjusting entries below:[pic]

Practice Problem 18-1 & 18-2

1. The Trial Balance section of the Worksheet for Laurel Export Company on December 31st shows a balance of $1,121.60 in the Supplies account. The company calculated that it had $615 of supplies on hand at the end of the fiscal period. How do you figure out the value of supplies they used? Show the equation & the answer here: _________________________________________

What two accounts are affected?

______________________ and ________________________

Show how the Adjusting Entries will look in the T-accounts below:

Supplies Supplies Expense

2. Laurel Export paid $1200 for a 12-month insurance policy on December 1. How much of this insurance will they have used on December 31st? Show the equation & your answer below:

____________________________________

For adjusting entries, what two accounts are affected?

______________________ and ________________________

3. Show how the adjusting entries will look in the T-accounts below:

Prepaid Insurance Insurance Expense

4. Make the appropriate Adjusting entries in the General journal for Supplies & Prepaid Insurance below:[pic]

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Bal.5549

Bal.1500

Bal.1121.60

Bal.1200

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