Required Each of the following independent events requires a year-end adjusting

Question

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. (Do not round intermediate calculations. Enter any decreases to account balances with a minus sign.) 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 The Accounting Equation Total Assets Stockholders' Equity Event/ Adjustment Liabilities Common Other Assets Retained Earnings Ca Stock 4,8001 = (1,200) (4,800) + a. Adj (1,200) b. Adj C. c. Adj d. Adj

Explanation / Answer

Workings:

The Accounting Equation Total Assets = Liabilities + Stockholders' Equity Event/
Adjustment Cash + Other Assets Common Stock + Retained Earnings a. -4800 + 4800 = + + a. Adj. + -1200 = + + -1200 b. 3600 + = 3600 + + b. Adj. + = -2700 + + 2700 c. + 1200 = 1200 + + c. Adj. + -1025 = + + -1025 d. -9600 + 9600 = + + d. Adj. + -4000 = + + -4000

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