adeng pustikaningsih, m.si. dosen jurusan pendidikan...
TRANSCRIPT
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Adeng Pustikaningsih, M.Si.
Dosen Jurusan Pendidikan Akuntansi
Fakultas Ekonomi
Universitas Negeri Yogyakarta
CP: 08 222 180 1695
Email : [email protected]
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3
The Adjusting Process
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3
1. Describe the nature of the adjusting
process.
2. Journalize entries for accounts
requiring adjustment.
3. Summarize the adjustment process.
4. Prepare an adjusted trial balance.
After studying this chapter, you should be
able to:
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Describe the nature of the
adjusting process.
Objective 1
3-1
3
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Under the accrual basis of
accounting, revenues are
reported in the income
statement in the period in
which they are earned.
3-1
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The accounting concept that
supports this approach to reporting
of revenues is called the revenue
recognition concept.
3-1
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The accounting concept that
supports reporting revenues and
related expenses in the same
period is called the matching
concept, or matching principle.
3-1
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Under the cash basis of
accounting, revenues and
expenses are reported in the
income statement in the period in
which cash is received or paid.
3-1
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The analysis and updating of
accounts at the end of the period
before the financial statements
are prepared is called the
adjusting process.
3-1
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The journal entries that bring
the accounts up to date at the
end of the accounting period
are called adjusting entries.
3-1
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Example Exercise 3-1
Indicate with a Yes or No whether or not each of the
following accounts normally requires an adjusting entry.
For Practice: PE 3-1A, PE 3-1B 10
Follow My Example 3-1
a. No c. Yes e. Yes
b. Yes d. No f. Yes
a. Cash c. Wages Expense e. Accounts Receivable
b. Prepaid Rent d. Office Equipment f. Unearned Rent
3-1
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Prepaid expenses, sometimes referred
to as deferred expenses, are items that
have been initially recorded as assets
but are expected to become expenses
over time or through the normal
operations of the business.
3-1Items That Need Adjusting
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Unearned revenues, sometimes
referred to as deferred revenues, are
items that have been initially recorded
as liabilities but are expected to become
revenues over time or through the
normal operations of the business.
3-1Items That Need Adjusting
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Insert Exhibit 1
13
3-1
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Accrued revenues, sometimes
referred to as accrued assets
(accrued means unpaid), are
revenues that have been earned
but have not been recorded in
the accounts.
3-1Items That Need Adjusting
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Accrued expenses, sometimes
referred to as accrued
liabilities, are expenses that
have been incurred but have
not been recorded in the
accounts.
3-1Items That Need Adjusting
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1716
3-1
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Example Exercise 3-2
Classify the following items as (1) prepaid expense, (2)
unearned revenue, (3) accrued expense, or (4) accrued
revenue.
For Practice: PE 3-2A, PE 3-2B 17
Follow My Example 3-2
a. Accrued expense c. Unearned revenue
b. Prepaid expense d. Accrued revenue
a. Wages owed but not c. Fees received but not yet
yet paid. earned.
b. Supplies on hand. d. Fees earned but not yet
received.
3-1
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Journalize entries for
accounts requiring
adjustment.
Objective 2
3-2
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Cash 2 065 000
Accounts Receivable 2 720 000
Supplies 760 000
Prepaid Insurance 2 200 000
Land 20 000 000
Office Equipment 1 800 000
Accumulated Depreciation-Equipment 50 000
Accounts Payable 900 000
Wages Payable 250 000
Unearned Rent 240 000
Cinta Cita, Capital 25 000 000
Cinta Cita, Drawing 4 000 000
Fees Earned 16 840 000
Rent Revenue 120 000
Wages Expense 4 525 000
Rent Expense 1 600 000
Depreciation Expense 50 000
Utilities Expense 985 000
Supplies Expense 2 040 000
Insurance Expense 200 000
Misscellaneous Expense 455 000
43 400 000 43 400 000
SolusiNet
Adjusted Trial Balance
December 31, 2007
Debit
Balances
Credit
Balances
3-2Unadjusted Trial Balance
for SolusiNet
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SolusiNet Supplies account has a
balance of Rp2,000,000 in the
unadjusted trial balance. Some of
these supplies have been used.
On December 31, a count reveals
that Rp760,000 of supplies are on
hand.
3-2Adjusting Process for Prepaid Expenses
@solusinet
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Supplies (balance on trial balance) Rp2,000,000
Supplies on hand, December 31 – 760,000
Supplies used Rp1,240,000
3-2
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Supplies 1 240 000
Supplies used
(Rp2,000,000 –
Rp760,000)
Dec. 31 1,240,000Dec. 31 1,240,000
Supplies
Bal. 2,000,000
Supplies Expense
Bal. 800,00014 55
2,040,000760,000
55
14
Dec. 31 Supplies Expense 1 240 0002007
22
3-2
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The debit balance of
Rp2,400,000 in SolusiNet
Prepaid Insurance account
represents the December 1
prepayment of insurance for 12
months.
3-2
@solusinet
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Dec. 31 200,000 Dec. 31 200,000
Prepaid Insurance
Bal. 2,400,000
Insurance Expense15 56
2,200,000
31 Insurance Expense 200 000
Prepaid Insurance 200 000
56
15
Insurance expired
(Rp2,400,000/12).
24
3-2
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Example Exercise 3-3
The prepaid insurance account had a beginning balance of
Rp6,400,000 and was debited for Rp3,600,000 of premiums
paid during the year. Journalize the adjusting entry required
at the end of the year assuming the amount of unexpired
insurance related to future periods is Rp3,250,000.
Follow My Example 3-3
Insurance Expense 6,750,000
Prepaid Insurance 6,750,000
Insurance expired (Rp6,400,000 +
Rp3,600,000 – Rp3,250,000).
For Practice: PE 3-3A, PE 3-3B25
3-2
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On December 1, the tenant
prepaid three months’ rent
for use of an office building
owned by SolusiNet. As of
December 31, only
Rp120,000 has been earned.
3-2
@solusinet
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2827
Dec. 31 120,000 Dec. 31 120,000
Unearned Rent
Bal. 360,000
Rent Revenue23 42
31 Unearned Rent 120 000
Rent Revenue 120 000
Rent earned
(Rp360,000/3
months)
23
42
3-2
240,000Bal.
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Example Exercise 3-4
The balance in the unearned fees account, before
adjustment at the end of the year, is Rp44,900,000.
Journalize the adjusting entry required if the amount of
unearned fees at the end of the year is Rp22,300,000.
Follow My Example 3-4
Unearned Fees 22,600,000
Fees Earned 22,600,000
Fees earned (Rp44,900,000 –
Rp22,300,000).
For Practice: PE 3-4A, PE 3-4B28
3-2
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SolusiNet provided Rp500,000
in services during December
for which the customer has not
been billed.
3-2
@solusinet
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3130
Dec. 31 500,000Dec. 31 500,000
Accounts Receivable
Bal. 16,340,000
Fees Earned12 41
Bal. 2,220,000
31 Accounts Receivable 500 000
Fees Earned 500 000
Accrued fees (25 hrs.
x Rp20,000)
12
41
3-2
2,720,000Bal. 16,840,000Bal.
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Example Exercise 3-5
At the end of the current year, Rp13,680,000 of fees have
been earned but have not been billed to clients. Journalize
the adjusting entry to record the accrued fees.
Follow My Example 3-5
Accounts Receivable 13,680,000
Fees Earned 13,680,000
Accrued fees.
For Practice: PE 3-5A, PE 3-5B 31
3-2
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At the end of December,
accrued wages amounted to
Rp250,000. Without this
adjusting entry, Wages
Expense is understated.
3-2
@solusinet
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Dec. 31 250,000
Dec.31 250,000
Wages Payable
Bal. 4,275,000
Wages Expense22 51
31 Wages Expense 250 000
Wages Payable 250 000
Accrued wages.
51
22
3-2
Bal. 4,525,000
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3534
Dec. 31 250,000
Dec.31 250,000
Wages Payable
Bal. 4,275,000
Wages Expense22 51
Bal. 4,525,000
3-2
Closing entries will be discussed in a later chapter.
For now, just be aware that Wages Expense is
closed after financial statements are prepare and its
balance rolled back to zero.
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The payment of January 10 wages totaling
Rp1,275,000 is shown below.
Jan. 10 Wages Expense 1 025 000
Wages Payable 250 000
Cash 1 275 000
3-2
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3-2
Dec. 31 250,000
Dec.31 250,000
Wages Payable
Bal. 4,275,000
Wages Expense22 51
Bal. 4,525,000
Jan.10 1,025,000
Jan. 10 250,000
An expense for
wages of
Rp1,025,000 is
recorded in the
new fiscal year.
The liability is
cancelled.
36
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Example Exercise 3-6
PT Sumitama Daya pays weekly salaries of Rp12,500,000 on
Friday for a five-day week ending on that day. Journalize the
necessary adjusting entry at the end of the accounting period,
assuming that the period ends on Thursday.
Follow My Example 3-6
Salaries Expense 10,000,000
Salaries Payable 10,000,000
Accrued salaries (Rp12,500,000/5
x 4 days).
For Practice: PE 3-6A, PE 3-6B 37
3-2
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Physical resources that are
owned and used by a business
and are permanent or have a
long life are called fixed
assets, or plant assets.
3-2
@solusinet
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As time passes, a fixed
asset loses its ability to
provide useful services.
This decrease in
usefulness is called
depreciation.
3-2
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Normal titles for fixed asset accounts and their
related contra asset accounts are as follows:
Fixed Asset Contra Asset
Land None—Land is not depreciated
Buildings Accumulated Depreciation—
Buildings
Store Equipment Accumulate Depreciation—Store
Equipment
Office Equipment Accumulated Depreciation—Office
Equipment
3-2
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SolusiNet estimates the
depreciation on its office
equipment to be Rp50,000
for the month of December.
3-2
@solusinet
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4342
Dec. 31 50,000
Depreciation Expense
Dec. 31 50,000
Accum. Depr.—Office Equip. 1953
31 Depreciation Expense 50 000
Accum. Depreciation—
Office Equipment 50 000
Depreciation of
office equipment.
53
19
3-2
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44
SolusiNet balance sheet would
show the office equipment at
cost, less the accumulated
depreciation.
Office equipment Rp1,800,000
Less accumulated
depreciation 50,000 Rp1,750,000
Book
value
3-2
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45
Example Exercise 3-7
The estimated amount of depreciation on equipment for the
current year is Rp4,250,000. Journalize the adjusting entry
to record the depreciation.
Follow My Example 3-7
Depreciation Expense 4,250,000
Accumulated Depreciation—
Equipment 4,250,000
Depreciation on equipment.
For Practice: PE 3-7A, PE 3-7B 44
3-2
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46
Summarize the
adjustment process
Objective 3
3-3
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47
Post
RefAdjusting Entries
Dec. 2007 31 Supplies Expense 55 1 240 000
Supplies 14 1 240 000
Supplies used (Rp2,000,000 - Rp 760,000)
31 Insurance Expense 56 200 000
Prepaid Insurance 15 200 000
Insrance expired (Rp2,400,000/12 months)
31 Unearned Rent 23 120 000
Rent Revenue 42 120 000
Rent earned (Rp360,000/3months)
31 Accounts Receivable 12 500 000
Fees Earned 41 500 000
Accrued fees (25 hrs. Rp20,000)
31 Wages Expense 51 250 000
Wages Payable 22 250 000
Accrued wages.
31 Depreciation Expense 53 50 000
Accum. Depr.-Office Equip. 19 50 000
Depreciation on office equip.
JOURNAL
Date Description Debit Credit
Adjusting Entry SolusiNet3-3
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48
3-3
(Continued)
Ledger with
Adjusting
Entries—SolusiNet
47
(In Rp000)
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49
(Continued) 3-3
48
(In Rp000)Ledger with
Adjusting
Entries—SolusiNet
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50
(Continued) 3-3
Ledger with
Adjusting
Entries—SolusiNet
49
(In Rp000)
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51
(Concluded) 3-3
Ledger with Adjusting
Entries—SolusiNet
50
(In Rp000)
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52
Example Exercise 3-8
For the year ending December 31, 2008, Mega Medika
mistakenly omitted adjusting entries for (1) Rp8,600,000 of
unearned revenue that was earned, (2) earned revenue that
was not billed of Rp12,500,000, and (3) accrued wages of
Rp2,900,000. Indicate the combined effect of the errors on
(a) revenues, (b) expenses, and (c) net income for 2008.
Follow My Example 3-8
a. Revenues were understated by Rp21,100,000
(Rp8,600,000 + Rp12,500,000).
b. Expenses were understated by Rp2,900,000.
c. Net income was understated by Rp18,200,000
(Rp8,600,000 +Rp12,500,000 – Rp2,900,000).
For Practice: PE 3-8A, PE 3-8B51
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53
3-4
Prepare an adjusted
trial balance.
Objective 4
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54
The purpose of the adjusted
trial balance is to verify the
equality of the total debit
balances and total credit
balances before the financial
statements are prepared.
3-4
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55
Cash 2 065 000
Accounts Receivable 2 720 000
Supplies 760 000
Prepaid Insurance 2 200 000
Land 20 000 000
Office Equipment 1 800 000
Accumulated Depreciation-Equipment 50 000
Accounts Payable 900 000
Wages Payable 250 000
Unearned Rent 240 000
Cinta Cita, Capital 25 000 000
Cinta Cita, Drawing 4 000 000
Fees Earned 16 840 000
Rent Revenue 120 000
Wages Expense 4 525 000
Rent Expense 1 600 000
Depreciation Expense 50 000
Utilities Expense 985 000
Supplies Expense 2 040 000
Insurance Expense 200 000
Misscellaneous Expense 455 000
43 400 000 43 400 000
SolusiNet
Adjusted Trial Balance
December 31, 2007
Debit
Balances
Credit
Balances
3-4
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56
Example Exercise 3-9
For each of the following errors, considered individually,
indicate whether the error would cause the adjusted trial
balance totals to be unequal. If the error would cause the
adjusted trial balance total to be unequal, indicate whether
the debit or credit total is higher and by how much.
a. The adjustment for accrued fees of Rp5,340,000 was
journalized as a debit to Accounts Payable for Rp5,340,000
and a credit to Fees Earned of Rp5,340,000.
b. The adjustment for depreciation of Rp3,260,000 was
journalized as a debit to Depreciation Expense for
Rp3,620,000 and a credit to Accumulated Depreciation for
Rp3,260,000. 55
3-4
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5756
Follow My Example 3-9
a. The totals are equal even though the debit should
have been to Accounts Receivable instead of
Accounts Payable.
b. The totals are unequal. The debit total is higher by
Rp360,000 (Rp3,620,000 – Rp3,260,000).
For Practice: PE 3-9A, PE 3-9B
3-4