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    Lizl's Avatar
    Lizl Posts: 1, Reputation: 1
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    #1

    Mar 22, 2008, 09:59 PM
    Adjusting entires, closing entries, post-closing trial balance
    I need to know what an adjusting entry, closing entry, and a post-closing trial balance look like. I will give you the figures of you need them.
    terplike's Avatar
    terplike Posts: 8, Reputation: 1
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    #2

    Mar 22, 2008, 11:06 PM
    An adjusting entry is simply an adjustment to a specific account(s) balance due to errors, missed postings, etc. Closing entries are reversing entries made to the final balances in the income and expense accounts and posting the profit or loss to retained earnings. The post closing trial balance is a list of balance sheet accounts (assets, liabilities, and capital) that should balance once adjusting entries and closing entries are made. (e.g. assets = liabilities + capital) If you want to give specific examples I will be glad to try and help.
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Mar 23, 2008, 12:39 AM
    Quote Originally Posted by terplike
    An adjusting entry is simply an adjustment to a specific account(s) balance due to errors, missed postings, etc.
    Not true. Those are correcting entries, not adjusting entries.

    Lizl, here's another post I made that has some general information about adjusting entries, i.e. some basics of what they are about and why they are made.

    https://www.askmehelpdesk.com/financ...ce-192929.html

    For a bit more on closing, see this thread:

    https://www.askmehelpdesk.com/financ...ts-188059.html
    alisonfrankie's Avatar
    alisonfrankie Posts: 2, Reputation: 1
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    #4

    May 3, 2008, 11:26 PM
    Here is a site that may help you
    netmba.com

    on the left hand side there is a space to search netmba for adjusting and closing entries.

    Also, a post-closing trial balance is your trial balance after you post your adjusting and closing entries.

    Here is a copy of one from my prior homework:

    AAA company
    Post-Closing Trial Balance
    September 30, 199X

    Debit Credit
    Account:
    Cash 29,343
    Accounts receivable 4,200
    Prepaid rent 2,700
    Prepaid insurance 2,200
    Photographic supplies 315
    Office supplies 125
    Land 7,500
    Photographic equipment 52,900
    Accum depreciation- photo equipment 400
    Office equipment 29,000
    Accum depreciation- office equipment 250
    Vehicle 12,500
    Accum depreciation- vehicle 500
    Accounts payable 7,930
    Note payable 20,000
    Salary payable 350
    Interest payable 100
    Unearned photographic service revenue 5,500
    Philip Browning, Capital 105,753
    Total 140,783 140,783
    nnennachioke's Avatar
    nnennachioke Posts: 1, Reputation: 1
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    #5

    Jun 17, 2008, 01:17 PM
    Quote Originally Posted by terplike
    An adjusting entry is simply an adjustment to a specific account(s) balance due to errors, missed postings, etc. Closing entries are reversing entries made to the final balances in the income and expense accounts and posting the profit or loss to retained earnings. The post closing trial balance is a list of balance sheet accounts (assets, liabilities, and capital) that should balance once adjusting entries and closing entries are made. (e.g. assets = liabilities + capital) If you want to give specific examples I will be glad to try and help.
    Thanks for the explanation. I would appreciate a specific example.

    Nnennachioke.
    ilavarasantd's Avatar
    ilavarasantd Posts: 1, Reputation: 1
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    #6

    Sep 12, 2008, 03:53 AM
    Adjustment entries to P&L Account and Balance Sheet
    tla's Avatar
    tla Posts: 1, Reputation: 1
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    #7

    Oct 29, 2008, 01:04 AM
    To make sure that the expenses of an accounting period are matched with the revenues, entries are made at the end of an accounting period to "adjust" the account balances accordingly.
    EXAMPLE: The amount of an asset that is used up during the accounting period is transferred to the corresponding expense account.

    Prepaid Insurance : You pay for this up front, but you may only use a portion of it during the accounting period for which you are ending so you take the actual amount that was used and place that in your "Insurance expense" account, now your Prepaid insurance account will show a balance of what is left in that account after subtracting the used amount.

    I hope this helps
    rubystensrud's Avatar
    rubystensrud Posts: 13, Reputation: 1
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    #8

    Feb 23, 2010, 08:08 AM
    Quote Originally Posted by tla View Post
    To make sure that the expenses of an accounting period are matched with the revenues, entries are made at the end of an accounting period to "adjust" the account balances accordingly.
    EXAMPLE: The amount of an asset that is used up during the accounting period is transferred to the corresponding expense account.

    Prepaid Insurance : You pay for this up front, but you may only use a portion of it during the accounting period for which you are ending so you take the actual amount that was used and place that in your "Insurance expense" account, now your Prepaid insurance account will show a balance of what is left in that account after subtracting the used amount.

    I hope this helps

    Would that be reverse entry?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #9

    Feb 24, 2010, 03:11 AM

    That's an adjusting entry. You're again mixing them up. You're also again digging up old threads.
    dschwartz7's Avatar
    dschwartz7 Posts: 1, Reputation: 1
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    #10

    Oct 23, 2010, 11:46 AM
    First things first, in order to understand what adjusting entries are you have to understand something about accrual based accounting. Accrual based accounting differs from cash based accounting because it recognizes revenues when they are earned and expenses when they are incurred rather than when cash is collected or paid out. Here are two examples. Accounts Receivables is an example of revenue that's been earned but not collected. Utilities Payable is an example of an expense that was incurred but not yet paid.Now that we know about accrual based accounting we can start to explore adjusting entries.
    Let's say you are the bookkeeper for Gulf Coast Printing which began operations in July of this year and you prepare financial statements quarterly. Also let's pretend the owner paid a 6 month lease on a building and the lease is $9.000. This is called a prepaid expense and is used up or expensed on a montlhly basis. During the first three months of operations the business has revenues of $30,000 of which $6,000 is uncollected so our trial balance would look like this.
    Debit Credit
    Cash $24,000
    A/R 6,000
    Rent 9,000
    Accounts Payable $2,500
    Common Stock 11,500
    Revenues 30,000
    Wage Expense5,000
    Total $44,000 $44,000
    Remember that three months of rent has been used up. Since this is a sic month lease that means we have to credit or reduce the prepaid rent $1,500 every month or $4,500. Now because that much has been used we have to debit an account called rent expense. An example of the adjusting entry in the General Journal would look like this.
    Date Account Title and Explanation Ref Debit Credit
    9/30/2010 Rent Expense 529 4,500
    Prepaid Rent 130 4,500
    To adjust prepaid rent and rent expense accounts.
    I'll will give one more example of an adjusting entry before moving on. This one involves a deferred expense. September 30 is on a Thursday. Let's say the pay period ends on a Tuesday but it has not been recorded yet. So adjusting entries have to be made to both Wage Expense and Wages Payable. Again we would have something like this.
    Date Account Title and Explanation Ref Debit Credit
    9/30/2010 Wages Expense 533 5,000
    Wages Payable 205 5,000
    To adjust wage expense and wages payable..
    From these two examples you can see that adjusting entries are made at the end of the accounting period in order to bring revenues and expenses in line with each other, they are not correcting entries. Correcting entries should be done as soon as the error is made and should not be put off. Here is the adjusted trial balance.
    Debit Credit
    Cash $24,000
    Accounts Receivable 6,000
    Prepaid Rent 4,500
    Accounts Payable $2,500
    Wages Payable 5,000
    Common Stock 11,500
    Revenues 30,000
    Salaries Expense 10,000
    Rent Expense 4,500
    Total $49,000 $49,000
    Now lets talk about closing entries. These are entries that again are made in the General Journal and are used to reset the temporary(income statement accounts to 0).Basically revenues are debited to a temporay account called Income Summary. Expense accounts are credited to the income summary account. The income summary account is debited to Retained Earnings and any capital drawing account is credited to Retained Earnings. Here is an example of closing entries.
    Date Account Title and Explanation Ref Debit Credit
    30-Sep Revenus 400 30,000
    Income Summary 350 30,000
    To close revenues to income summary

    Income Summary 350 14500
    Rent Expense 729 4500
    Wages Expense 733 10000
    To close expense accounts to income summary

    Income Summary 350 15500
    Retained Earnings 320 15500
    To close income summary to retained earnings
    Now all temporary accounts are set to zero and are ready for the next period. Finally a post closing trial balance is just a trial balance with the balance sheets accounts listed.
    Debit Credit
    Cash $24,000
    Accounts Receivable 6,000
    Prepaid Rent 4,500
    Accounts Payable $2,500
    Wages Payable 5,000
    Common Stock 11,500
    Retained Earnings 15,500

    Total $34,500 $34,500
    I hope this answers your questions.
    atique2's Avatar
    atique2 Posts: 1, Reputation: 1
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    #11

    Jan 19, 2011, 05:10 AM
    depriciation building amounting to 500000 (estimating life 10 years) residual value 10000
    fraternity's Avatar
    fraternity Posts: 1, Reputation: 1
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    #12

    Mar 14, 2011, 02:13 AM
    Weh
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #13

    Mar 14, 2011, 06:36 AM

    atique2 you need to know what method of depreciation you are using.

    If you are using straight line method then use this formula:
    (Cost of asset - Salvage Value) / Estimated Useful Life = Depreciation per year.

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