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Problem 2-33 Effect of adjusting entries on the accounting equation Required Each of the following independent...

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

Total Assets

=

Liabilities

+

Stockholders’ Equity

Event/

Adjust.

Cash

+

Other Assets

=

+

Common Stock

+

Retained Earnings

a.

               

a. Adj.

1

b.

b. Adj.

              2

                                                                

c.

c. Adj.

3

d.

d. Adj.

4

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.

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