Recording-2025-03-18T03:18:58.203Z

Depreciation Journal Entry

• Date: 30/06/2020

  • Account: Depreciation Expense, Office Equipment

    • Type: Debit

    • Amount: 1,020

• Account: Accumulated Depreciation, Office Equipment

  • Type: Credit

  • Amount: 1,020

• Narration: Recorded depreciation for the year

Understanding T-Accounts

• Debits: Always on the left side

• Credits: Always on the right side

• Closing Balances:

  • Depreciation Expense Account:

    • Balance at year-end: 1,020 (debit)

  • Accumulated Depreciation Account:

    • Balance at year-end: 3,490 (credit)

Unearned Fees

• Definition: Payments received for services not yet provided, considered a liability

  • Initial Balance: 1,100

  • Earned Amount: Half of unearned fees = 1,100 / 2 = 550

• Journal Entry for Unearned Fees:

  • Date: 30/06/2019

  • Account: Unearned Fees

    • Type: Debit

    • Amount: 550

  • Account: Fees Revenue

    • Type: Credit

    • Amount: 550

  • Narration: Recognized fees earned

Bank Fees Adjusting Entry

• Date: N/A

  • Account: Bank Fees Expense

    • Type: Debit

    • Amount: 25

  • Account: Cash at Bank

    • Type: Credit

    • Amount: 25

  • Narration: Recorded bank fees deducted

Prepaid Insurance Adjustment

• Initial Payment for Insurance: 2,730

• Period: 12 months

• Months Used by end of the period: 8 months

  • Insurance Expense for this year: 2,730 / 12 * 8 = 1,820

• Journal Entry:

  • Date: 30/06/2019

  • Account: Insurance Expense

    • Type: Debit

    • Amount: 1,820

  • Account: Prepaid Insurance

    • Type: Credit

    • Amount: 1,820

  • Narration: Expensed prepaid insurance

Rent Adjustment

• Prepaid Rent Balance: 2,100 for 3 months

• Used Amount by End of Period: 700

• Journal Entry:

  • Date: 30/06/2019

  • Account: Rent Expense

    • Type: Debit

    • Amount: 700

  • Account: Prepaid Rent

    • Type: Credit

    • Amount: 700

• Narration: Expensed prepaid rent

Impact of Adjustments on Profit

• Adjustments Summary:

  • Overstatement of Profit due to unearned revenue not recognized: 7,975

• Final Adjusted Profit: 56,925.

  • Original Unadjusted Profit: 64,900.

Adjusted Trial Balance Template

• Structure:

  • Assets: List all accounted assets and their balances

  • Liabilities: List all liabilities, including adjustments made for accrued and deferred items

  • Equity: Show the final balance after adjustments in capital and additional income/loss

• Total Debits must equal Total Credits to ensure correctness and compliance with accounting principles.