Unearned revenue for 2010 and 2011 was overstated by P5,000 and P800, respectively.

Sales on account in 2010 for P20,000 were recorded in 2011.


Purchases on term n/30 in 2011 for P10,000 were recorded in 2010.

Allowance for uncollectible accounts is maintained at 5% of accounts receivable ending balance.



Please help me I'm having a hard time to understand the concept of making an adjustment entries.. Thanks for th response.. :)

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Originally Posted by namron

Unearned revenue for 2010 and 2011 was overstated by P5,000 and P800, respectively.

Sales on account in 2010 for P20,000 were recorded in 2011.


Purchases on term n/30 in 2011 for P10,000 were recorded in 2010.

Allowance for uncollectible accounts is maintained at 5% of accounts receivable ending balance.



Pls help me i'm having a hard time to understand the concept of making an adjustment entries.. Thanks for th response.. :)

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The concept is you adjust to as to match revenue and expenses to the relevant period

So the sales belong in 2010 the purchases in 2011
The allowance for uncollectables is debit to expense and included in liabilities as a provision
And unearned revenue is adjusted between the two periods

Thanks.. but how is it? My problem is I'm having a hard time to use an appropriate account titles.. what should be the debit and credit one.. thanks by the way.. God Bless ! :)

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Originally Posted by paraclete

the concept is you adjust to as to match revenue and expenses to the relevant period

so the sales belong in 2010 the purchases in 2011
the allowance for uncollectables is debit to expense and included in liabilities as a provision
and unearned revenue is adjusted between the two periods

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Thanks.. but how is it? My problem is I'm having a hard time to use an appropriate account titles.. what should be the debit and credit one.. thanks by the way.. God Bless ! :)

Quote:

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Originally Posted by namron

Unearned revenue for 2010 and 2011 was overstated by P5,000 and P800, respectively.

Sales on account in 2010 for P20,000 were recorded in 2011

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In 2010 sales credit 20000 debit accrued income
In 2011 debit sales credit accrued income

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Purchases on term n/30 in 2011 for P10,000 were recorded in 2010.

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In 2010 credit purchases 10000 debit prepayments
In 2011 debit purchases credit prepayments

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Allowance for uncollectible accounts is maintained at 5% of accounts receivable ending balance.

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Debit bad debts expense credit provision for doubtfull debts

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Please help me I'm having a hard time to understand the concept of making an adjustment entries.. Thanks for th response.. :)

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We can't do your work for you you know adjusting entries are made under the matching concept to match revenue and expenses belonging to the same period and under the concept of true and fair view to remove distortions caused by errors or timing differences