In: Accounting
Problem 2-33 Effect of adjusting entries on the accounting equation Required 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
PROBLEM 2-33
The Accounting Equation |
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Total Assets |
= |
Liabilities |
+ |
Stockholders’ Equity |
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Event/ Adjust. |
Cash |
+ |
Other Assets |
= |
+ |
Common Stock |
+ |
Retained Earnings |
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a. |
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a. Adj. |
1 |
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b. |
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b. Adj. |
2 |
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c. |
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c. Adj. |
3 |
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d. |
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d. Adj. |
4 |
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1$ x /12 = $
2$ x /12 = $
3$ x /12 = $
4$ x /12 = $
a. Paid $4,800 cash in advance on October 1 for a one-year insurance policy.
b. Received an $3,600 cash advance for a contract to provide services in the future. The contract required a one-year commitment, starting April 1.
c. Purchased $1,200 of supplies on account. At year’s end, $175 of supplies remained on hand. d. Paid $9,600 cash in advance on August 1 for a one-year lease on office space.